Sell Rallies in the EUR/USD and GBP/USD

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Sell Rallies in the EUR/USD and GBP/USD

We ended last week with a boost to the USD after Friday’s US jobs report showed 248K jobs being added in September while the unemployment rate fell to a 6-year low at 5.9%.The EUR/USD and GBP/USD fell to new lows on the year after the data release. As we begin a new week, both pairs are rebounding a bit, but we should look out for sellers on these rallies.

EUR/USD 1H Chart 10/6

eurusd 1h chart 10/6

(click to enlarge)

The 1H chart shows the EUR/USD rallying from the 1.25 handle. Look for the reaction of the 10/6 US session to this rally, especially if price approaches 1.26. The 100-, and 50-hour simple moving average should provide some resistance. There is also a support pivot area around 1.2620, which should provide additional resistance factors.

EUR/USD Weekly Chart
eurusd weekly chart
(click to enlarge)

From the weekly chart, we can see that price is falling sharply. Buying at this point will be like trying to catch a falling knife. Until we get at least a bearish weekly candle, we should continue to be bearish. EUR/USD has room to fall until 1) 78.6% retracement at 1.2460, 2) 1.2286 pivot, and the 2012-low at 1.2042.

GBP/USD 4H Chart 

gbpusd 4h chart 10/6

(click to enlarge)

GBP/USD fell sharply after the NFP report as well. falling below the 1.60 handle
and finally stalling around 1.5950. We are seeing some consolidation but not much. Will we even see an intra-session bullish correction? When we look at the 4H chart, we can see some resistance factors around 1.6160. Here we will see a falling resistance line and a previous support./resistance pivot area. Meanwhile, if we see the 4H RSI pull back toward 60, get ready for sellers.

GBP/USD Weekly Chart
gbpusd weekly chart

(click to enlarge)

The weekly chart shows the GBP/USD falling below the 50% retracement and 200-week SMA around 1.60. It also shows why we should expect resistance if price comes back to 1.62, so give it some head space for the short-term, but expect sellers on the rally. If the GBP/USD does remain bearish as the weekly chart suggests it will, the next support could be around 1.5720-1.5750 area, which involves the 61.8% retracement and a previous resistance pivot in 2013.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.