Forex Technical Set-ups for the Week Ahead

Friday's movement should see EURUSD push towards 1.4700

Having moved higher off 1.4322 support on the weekly chart, EURUSD has clearly broken from the corrective channel (blue). An engulfing green candle from Friday should have the follow through to break through the triangle formation (pink), which should push the pair up towards 1.4700; the previous high; and 1.4746; the weekly trend line.

Bullish views of EURUSD could create long opportunities in GBPUSD

GBPUSD has pushed off 1.6289 support on the weekly. A large reversal candle was recorded on Friday, with the pair unable to hold below support. The pair has yet to make a higher low on shorter time frames.

However, the EURGBP chart (analysis to follow below) suggests a corrective pattern (lower), so with a EURUSD bullish view, pullbacks in GBPUSD might be seen as buying opportunities.

A choppy 3 wave corrective pullback could soon follow for EURGBP

On the weekly chart, EURGBP has recorded a bullish candle off support at 0.8691, however the previous area of resistance can be seen at 0.8880-0.8900.

On the daily chart, after producing a double bottom with divergence EURGBP has rallied strongly.

On the four hour chart, the 261.8% projection of the first wave would take the pair to 0.8894; close to the area of resistance, however the top may be in place from Friday’s 4hr engulfing pattern at the high. A corrective pullback is expected soon in a choppy three wave sequence. This might be seen as an opportunity to ‘get long,’ with the prime area being 0.8770 - 0.8750. A larger Bullish pattern is then likely to unfold with the resistance area (0.8900) broken to the upside.

Whilst views are bullish AUDUSD faces strong resistance at 1.0574

AUDUSD appears strongly bullish on the weekly chart. The pair does however face some some strong resistance at 1.0574.

On the daily chart, it looks like a higher correction is due in an ABC pattern. 1.0638; the 61.8% retracement; looks to be the first area of attraction.

A bullish triangle breakout (4hr engulfing candle) would suggest that the rally could extend past 61.8% with 1.0829 (78.6%) looking more likely.

Despite evidence of investor indecision, AUDJPY could move higher

The previous week produced an indecisive ‘Inside Doji’ in AUDJPY. Last week’s price action produced a bullish candle and; although still an inside candle; this gives the cross a slight upside bias.

Having now broken through resistance, AUDJPY looks set to make a larger bullish ABC correction. A perfect formation would see the pair target 83.50.

On the four hour chart, a bullish engulfing pattern should give the cross enough momentum to break and clear the high from the 17th August.

After consolidating, the DOW could move lower following the rally

Since the strong sell-off at the end of August the DOW has been consolidating in a large triangle formation. This consolidating pattern would normally have a slight bias to break to the downside, however Elliott Wave theory may see this as a 4th wave correction with wave C yet to be fully realised. The weekly candle also shows an Inside Harami candle, which illustrates indecision with a slight upward bias. This should only be a temporary rally before the next major sell off.

GBPJPY shows indecision, with Wave C targetting 127.75 to 128.00

For GBPJPY, the last two weekly candles have been inside the range of the week 8th August. This shows investor indecision at these levels.

The Daily chart suggest that a larger ABC formation has yet to complete with wave C targeting 127.75 - 128.00.

NZDUSD could target 0.8509 within an ABC corrective sequence

Price action in NZDUSD produced an engulfing green candle after the previous week's indecisive inside red.

The pair now looks set to produce a larger ABC corrective sequence with 0.8509 – 0.8612 the prime target area.

An ascending triangle breakout to the upside – trading with the bias could see the pair rally beyond the aforementioned area with 8840 the triangle target.