Week Ahead 1St June Technical Analysis From Fxmars

June 2, 2014

Posted by fxmars.com

EURUSD:

With crossing the 1.36714 neck line of the green double top formation on D1 with tops on March 13 and May 8, the price of the Euro decreased to 1.35857 Dollars and created a bottom (orange), which could be considered as an important level for the further continuation of the formation. The drop of the price resembles a falling wedge formation itself (white). The price broke the wedge, which implies for an eventual correction of the price. Furthermore, there is a bullish divergence between the last two bottoms of the price and the stochastic oscillator. Moreover, with its current position, the stochastic oscillator supports the potential correction, which is getting formed now. The expected increase could meet resistance in the already broken neck line at 1.36714 and the blue bearish trend line from 2008.

USDJPY:

After breaking the lower level of the purple triangle from January, the price started a slight decrease, which could be followed by the white bearish trend line on the graph. The bearish movement even brought the price through the 101.197 support and reached the 4-months low of the price at 100.756, where the price found support. The price was resisted by the white bearish trend line on Tuesday and a new decrease of the price was started. The stochastic oscillator also started a decrease after entering the 80-100 zone, which supports the eventual drop. On the other hand, there is an obvious bullish divergence between the last three tops of the price and the stochastic oscillator, which speaks of a completely different scenario. If the price follows the bullish divergence, we might see the price breaking the white bearish trend line from April 7 and increasing to at least 102.770. In case of a bullish increase, a potential target for the price might appear to be the area of the interaction point of the two sides of the already broken purple triangle and the 102.770 resistance, which we have marked with a green circle. If the price continues its decrease, it would meet again the many times tested 101.197 support and eventually the 100.756 support.

GBPUSD:

After breaking through the lower level of the blue bullish corridor from November 2013, the cable crossed the neck line on 1.67214, which confirmed the double top formation with tops from May 6 and May 25. The price created a bottom at 1.66905 (orange) and started an increase, which could be considered as a correction of the bearish movement caused by the already confirmed formation. The two lines of the stochastic oscillator have crossed in the 0-20 area, which supports the potential correction. Furthermore, the last two tops of the price are in a bullish divergence with the stochastic oscillator. For this reason, we believe that the price would increase to the white bearish trend line, which indicates the two tops of the double top formation, or it could test the already broken lower level of the blue bullish corridor as a resistance, or why not both of them – the green circle.

USDCHF:

The situation with the Swissie is pretty much specular to the EUR/USD pair. With crossing the neck line at 0.89486, the price has confirmed a double bottom formation (green) with bottoms from March 13 and May 8. The followed rising wedge formation (white) was broken through the lower level, which implies of a correction of the bullish movement. At the same time, there is a bearish divergence between the last two tops of the price and the stochastic oscillator. Furthermore, the stochastic oscillator has just confirmed an overbought market, which also supports the potential correction. For this reason, we expect a decrease in the price, which could even reach the support at 0.88618 – the neck line of the previous smaller double bottom formation (purple).

AUDUSD:

After the attempt to break the 0.92027 neck line of the double top formation (green) with tops from April 10 and May 14, the price bounced from the neck line and increased to the upper level of the already broken purple triangle. With finding resistance in the line for third time, it could be said that the line is confirmed to be a bearish trend line and the double top formation could evolve into a bullish pennant, where the upper level is the purple bearish trend we discussed and the lower level is the unbroken 0.92027 support – the neck line of the potential double top formation. The classical scenario by such pennants is to see three tests of the level, which is expected to get broken, and then the break. For this reason, we believe that the price might return to the lower level of the formation for the test. Furthermore, the stochastic oscillator is about to signalize for an overbought market soon. This does not mean that the chances for a confirmation of the green double top formation are lost. The price might still break the neck line and could give us a bearish signal. If the price breaks through the upper level of the formation, the price would be about to meet the 0.93787 and the 0.94589 resistances. If the price breaks the neck line of the double top formation, it would eventually decrease at least to the 0.98982 support, which indicates the bottoms from March 17 and March 20.

XAUUSD:

After the price broke through the purple bullish trend line from the beginning of January, the price started a consolidation, which resembles an isosceles triangle (yellow). A break in the lower level of the formation appeared and the price started decreasing. It could be said that the price has completed about 80% of the potential bearish movement after the break, which is expected to reach the 1230.83 support, which indicates the bottoms of the price from January 15 and January 23. On the other hand, the price shows a decrease of the bearish intensity and at the same time, the stochastic oscillator is currently giving signals for an oversold market. For this reason, we believe that the price might change direction and in such case, keeping the short position might appear to be a risky task having in mind the fact that we have already achieved 80% of the potential movement. If the decrease in the price continues, the potential support is the already mentioned 1230.82 level. If a change in the movement occurs, we could expect the price to meet the 1268.56 resistance and the upper and the lower level of the already broken yellow triangle.

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