Technical Update - EURUSD, GBPUSD, USDJPY and Dollar Index. Will the very stretched trends continue?

GBPUSD Bullish Engulfing candle was cancelled out with the bearish move yesterday (but as mentioned in previous update Bullish Engulfing patterns are not that reliable in the FX market) . Buyers ran out of steam after being rejected at the upper falling trendline cutting short the correction before it reached 1.23.

RSI is still showing negative sentiment but RSI divergence could be building as illustrated by the dashed blue line. However, the trend in GBPUSD is still down and could dip down to strong support at around 1.20 level

If GBPUSD Is breaking above the upper falling trend line it could be a strong indication of a correction unfolding. Resistance at around 1.2275

USDJPY is slowly ticking higher forming a rising wedge like pattern. There is no strong resistance until around 152 but a sell-off could hit before USDJPY is reaching that level. If USDJPY is breaking bearish out of the wedge i.e., below the lower rising trendline a move down to support at around 146.45 could be seen. Minor support at 148.50

If breaking bullish out of the wedge i.e., above the upper rising trendline the wedge pattern has been demolished.

RSI divergence is indicating a bearish breakout. However, if RSI is closing above its horizontal dashed line the divergence is cancelled. A bullish USDJPY break out of the wedge is likely to do that (pushing RSI above the dashed line thus cancelling the divergence) That would pave the road to 152 for USDJPY.

Dollar Index correction was very limited before bidders took back control. The Dollar Index is still above the lower rising trendline in the channel pattern and moving towards strong resistance at around 107.90

Now also RSI divergence is building – jury’s still out however, but indication is there and the Index could see trend exhaustion before hitting 107.90.

If breaking below lower rising trendline and below 105.34 a correction down to around 104.39 could be seen