AUD/USD: Correction in Down-Trend
The aussie has found a temporary bottom at 0.9162 and over the last 3 days it has steadily risen higher. The recovery has not been strong enough yet to convince me that it will extend further, and we may even have falling three methods bearish continuation forming, however, there is a compelling reversal pattern at the lows forming too, which looks like a possible inverted head and shoulders, holding out the promise of a delicate recovery. A decisive break above 0.9300 could see the move higher extend to 0.9405. However, the down-trend remains dominant and likely to reassert itself later, or possibly even sooner, with a decisive breach of the lows confirming a move down to 0.9000, possible even down to the monthly pivot at 0.8975. The long-term target remains 0.8010 from the multi-month triangle.
EUR/USD: Possible Inverted H&S
The EUR/USD pair has formed a possible inverted head and shoulder's pattern at the well-supported lows. There are no less than 3 moving averages bunched together there including the 50, 100 and 200-day MA's. The neckline for the inverted H&S isn't really so clear but it is probably at around 1.3140, and so a decisive breach – perhaps above 1.3150 for safety – would lead to a run up to the pattern's target at 1.3210, which is also a level at which resistance begins to thicken from the monthly and weekly pivots, the 100-4hr and the 100-hr MA's and an old trend-line. We cannot ignore the possibility of a more bearish scenario developing given the strong previous down-trend, but I would want to see a break below 1.3115 – and then for real confirmation – follow-through below the the cluster of MA's at 1.3058; although downside is limited by support at 1.3010.
GBP/USD: Bounce Extending
The pound has rebounded slightly after reaching the 50% Fibonacci level of the previous move. The bounce has probably broken above the down-sloping trend-line drawn from the June 17 highs, and this indicates a push higher with an upside target at - perhaps 1.5550. 'Elliot' wave patterns indicate the possibility that we could be starting a wave 5 higher up to the 1.5750 highs. For a more bearish outlook I would want to see a break below the 1.5342 lows, however several long MA's, including the 50-day at 1.5380 and the 100-day at 1.5320 are impeding downside progress – and even if broken there is support not far lower at 1.5268.
Analysis By: Joaquin Monfort, Forex4you Analyst
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