Technical Update - EURUSD, GBPUSD, EURGBP and Dollar Index Technical Update - EURUSD, GBPUSD, EURGBP and Dollar Index Technical Update - EURUSD, GBPUSD, EURGBP and Dollar Index

Technical Update - EURUSD, GBPUSD, EURGBP and Dollar Index

Forex 4 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  EURUSD below key support eyeing 1.05
GBPUSD testing key support at 1.2175. Will it hold?
EURGBP testing 0.87 resistance set to movbe higher
Dollar Index testing key resistance at 105.80. Correction time before higher levels?

EURUSD After a couple of tries EURUSD has closed below key support at around 1.0635.

RSI has cancelled its divergence indicating likely lower EURSUD levels. Next support at around 1.05

If 1.05 is reached expect a correction but the underlying sentiment and trend is down as indicated by alle daily Moving Averages are declining. Adding to that the 55 Moving Average is just a few days from breaking below the 100 Moving Average.

Medium-term EURUSD is currently indicating bearish trend. If EURUSD is closing the week below 1.0635 and if weekly RSI is closing below 40 threshold.

To demolish the short-term bearish trend a close above 1.0770 is needed.

Source all charts and data: Saxo Group

GBPUSD is testing key support at around 1.2175. RSI is around 20 i.e., indicating extremely oversold  but there is no divergence suggesting lower GBPUSD levels are likely. However, a correction should be expected. We rarely see these long periods of trends as we have now seen in GBPUSD (down trend since mid-July) without a larger correction

If RSI is breaking back above its falling (blue) trendline expect a correction to occur. A move up to test the 200 daily Moving Average from beneath is quite common after breaking below.

However, the 1.2175 support is not the strongest support level meaning GBPUSD is likely to continue (after a likely correction) its downtrend towards 1.20 level. 
21, 55  and 100 Moving Averages are alle declining and the 200 is very close to showing an underlying bearish trend and sentiment

Medium-term GBPUSD is in a confirmed bearish trend after it closed last week below 1.23.
Weekly RSI is currently below 40 threshold and if closing the week below it will just add to the bearish picture with medium-term downside potential to around 1.18.

To reverse the bearish trend short term a close above 1.2550 is needed. To demolish the trend i.e., put it on pause a close above 1.2425

EURGBP has reached the 0.382 distance of the top to bottom of the Descending triangle and is  is testing the triangle peak at around 0.87.

RSI is above 60 strongly indicating higher EURGBP levels are likely. A close above 0.87 will pave the way towards 0.88 as indicated by the two vertical arrows.

However, statistically the move after a Descending triangle break out is often cut short at around the 0.618 ratio i.e., at around 0.8737

To demolish this bullish picture EURGBP needs to close back below the upper falling trend line in the triangle

The Dollar Index has touched the strong resistance at around 105.80.
RSI is showing positive sentiment but there is divergence indicating the uptrend is stretched and a correction is looming.

If the Dollar Index is closing above 105.80 the RSI is closing above its upper falling trendline indicating likely higher Index levels. But if the Index is sliding back and the RSI is closing below its lower rising trendline a correction is most likely unfolding

Strong support at around 104.40. A close below is likely to initiate a larger correction down to the 0.382 retracement at around 103.35
A close below 102.85 will reverse the bullish trend.

Medium-term the Dollar Index is likely to move higher. Weekly RSI has closed above 60 indicating likely higher Index levels.
If the Index is closing above 105.80 is could pave the way top 107.90


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