The aussie has broken above a trend-line and is unfolding in an expanding wedge formation at the lows which signals the possibility of a reversal of the longer-term trend. The exchange rate has just reached the upper border line of the wedge and found resistance there and started to fall. This level at around 0.9200 also coincides with the R1 monthly pivot and the 50-day MA increasing its significance. The pair has started to fall back down and will probably continue in the short-term perhaps tracing out a pull-back to the monthly pivot at 0.9065. Eventually, however, it will probably rise again. If it breaks out of the wedge at 0.9250 that will give strong bullish confirmation of a move up to 0.9590; a break above 0.9317 would be a further bullish sign.
EUR/USD: Trend-line resisting
The short-term up-trend since July remains intact. We are at a key level – because if the 1.3380 (or for the more conservative the 1.3416 highs) is broken, it will signal a change in the short mid-term trend to 'up' and a probable move higher to 1.3508, initially. Strong resistance at the present level from a trend-line originating in 2011 and touching the January highs could, however, successfully resist further upside temporarily. This combined with a possible head and shoulders, on the hourly chart, with diminishing volume on the right shoulder at the current highs may signal the potential for more downside if its neckline at 1.3310 is decisively breached, and a target for the pattern at 1.3240.
GBP/USD: Change of trend
The GBP/USD pair's trend has probably changed after last Thursday's strong up-day. This broke above a major down-sloping trend-line giving a strong bullish signal. It is now probable that the bearish breakout from the multi-month triangle has stalled and will reverse. The pair will probably continue higher – eventually even to the 1.6000 level of resistance. A break above 1.5750 would provide a strong technical signal of continuation higher. Although 1.6000 provides an eventual objective the R2 monthly pivot level at 1.5770 gives a nearer target.
Analysis By: Joaquin Monfort, Forex4you Analyst
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