EUR/USD, GBP/USD Confirm Divergence in Breakout Direction
The EUR/USD is building a sideways corrective zone, which is indicated by the various trend lines (red/blue and orange/green). The correction could be part of a wave 2 (brown) correction, which is invalidated if price breaks above the 100% Fibonacci level of wave 2 vs 1.
The EUR/USD is showing bullish momentum after failing to break support (green). A break above the resistance levels (red/orange) could see a continuation of the momentum (blue arrows) towards the Fibonacci targets of wave C vs A.
The GBP/USD also broke the previous bottom (dotted blue) after completing wave 4 (blue) and breaking below the support trend line (dotted green). Price has now established a new lower low within wave 5 (blue) and price will most likely test the previous bottom (green).
The GBP/USD is showing a corrective chart pattern with price moving sideways, which is typical for a wave 4 (brown). Moreover, there was strong bearish momentum prior to the correction, which has been marked as a wave 3 (brown). The wave 4 (brown) is invalidated if price breaks above the 61.8% Fibonacci retracement level of wave 4 vs 3. Price could continue with the downtrend (red arrows) if price manages to break below the support trend line (green) with a strong breakout candle.
The USD/JPY indeed built a larger ABC (blue) correction within wave 4 (purple) as expected in the previous wave analysis. The question is how far the wave C (blue) will correct before completing wave 4 (purple) and there are multiple potential answers. Price could build a triangle formation, which would indicate a lack of a break below wave A (blue) support, or price could bounce at the Fibonacci levels of wave 4 vs 3.
The USD/JPY needs to break above or below the trend lines before a breakout (arrows) is possible. A break below support (blue) could see price test the Fib levels nearby.
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