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Technical Update - USDJPY, EURGBP & GBPUSD
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: USDJPY bounced from strong support but still in a down trend. The pair needs to break bullish out of falling channel for 140
EURGBP testing key resistance at 0.8867. Upside potential to 0.92
GBPUSD broken out of rising wedge but sellers have failed to take control. 1.19 support is key
USDJPY bounced off support area 131.49-130.38 and the lower trendline in the falling channel like pattern. Divergence on RSI indicates that could have been the lows for now. There is still negative sentiment however, but if USDJPY breaks above the upper falling trend and back above 200 daily SMA there could be short-term upside momentum to 140-141.25.
If USDJPY slides back and closes below 130.38 it is likely to fuel a sell-off down to around 126.35 . That scenario is likely to unfold if RSI also breaks below its lower rising trendline.
EURGBP has at first attempt been rejected at the resistance at around 0.8867. A close above could move the pair for 0.92 i.e., same distance a wide sideways consolidation area illustrated by the vertical arrows.
However, if EURGBP slides back below 0.8754 it could stay range bound for quite some time.
RSI is showing positive sentiment however and all Simple Moving Averages (SMA) are rising i.e., showing underlying bullish sentiment indicating we are to see higher levels in EURGBP.
GBPUSD broke bearish out of its rising wedge like pattern now hovering around the 200 daily SMA. Bears don’t seem to be able to push the pair lower. RSI is still showing positive sentiment and there is no divergence indicating we could see a GBPUSD moving higher and have another attempt reaching resistance 1.2667.
If sellers succeed in pushing GBPUSD below 1.19 that could change and give them more energy to push GBPUSD down to around 1.1629.
Medium-term picture
GBPUSD got rejected at the 55 weekly SMA which is dropping sharply and has not managed to close a week above resistance at 1.2293. Weekly RSI is still showing negative sentiment indicating GBPUSD bounce from September trough has run its course and lower levels is in the cards. GBPUSD could slide back down to around 1.14
For GBPUSD to gain further upside a weekly close above 1.2293 is needed combined with RSI closing above 60 threshold.
GBPUSD got rejected at the 55 weekly SMA which is dropping sharply and has not managed to close a week above resistance at 1.2293. Weekly RSI is still showing negative sentiment indicating GBPUSD bounce from September trough has run its course and lower levels is in the cards. GBPUSD could slide back down to around 1.14
For GBPUSD to gain further upside a weekly close above 1.2293 is needed combined with RSI closing above 60 threshold.
RSI divergence explained: When price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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