HomeContributorsTechnical AnalysisEUR/USD Breaks Above Bearish Channel But Faces Wave-4 Fibs

EUR/USD Breaks Above Bearish Channel But Faces Wave-4 Fibs

Currency pair EUR/USD

The EUR/USD broke above the resistance (dotted red) of the bearish trend channel but still has horizontal resistance (red/brown) nearby. A break above the bottom (brown) of wave 1 (blue) and 61.8% Fibonacci retracement of wave 4 vs 3 invalidates the wave 4 (blue).

The EUR/USD is build bullish price action which could be an ABC zigzag (green) within wave 4 (blue). A bearish turn that stays below the 61.8% Fib level could see a continuation of the downtrend towards 1.05. In that case, the bullish break above the channel could turn out to be a small overthrow. A break above the 61.8% Fibonacci retracement of wave 4 vs 3 invalidates the wave 4 (blue).

Currency pair GBP/USD

The GBP/USD retraced back and bounced at the support trend line (blue) and 78.6% Fibonacci retracement. A break below the support and 100% Fib invalidate the bullish continuation. A break above the resistance trend line (orange) could see price test higher resistance (red/brown).

The GBP/USD broke support (dotted green) and made one more bearish push towards support. The bullish bounce seems to be impulsive which is why it has been marked as a wave 1 (purple). A break below the 100% level of wave 2 vs 1 (purple) invalidates the wave count.

Currency pair USD/JPY

The USD/JPY is moving higher within an uptrend channel (red/green lines) after breaking out above the long-term resistance trend lines (dotted orange). The current bearish retracement could receive potential support from the channel (green) and Fibonacci levels of wave 4 (blue). A break below the 61.8% Fibonacci level of wave 4 vs 3 makes it likely that a different wave structure is taking place.

The USD/JPY could complete a bearish ABC (brown) zigzag but a bounce at the 38.2% Fibonacci level will most likely not be the end of wave 4 (blue). Wave 4 corrections are typical complex so this ABC (brown) will probably be part of larger WXY correction.

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