Euro and Pound Weekly Overview - September 16 close

EURUSD

The Euro-Dollar barely made a new low last week, with price well supported at 1.3500 from where it bounced back for a retest of the broken ascending trend line and pierced the 23.6% Fibonacci retracement, ending just above the weekly SMA100. Our bullish views were on point as price went well above our targets reaching above 1.3900. I would expect another attempt to reach the SMA200, 38.2% retracement and previous rising trend line, and further to a 50% correction level at the round number 1.4000 which if broken could lead to the confluence of the SMA34 and middle line of the Bollinger bands, around 1.4200/90. Another scenario that can set in place though, is a break of the lows and continuation to the next support at 1.3340, then to our medium-term target of 1.2880/1.2900.

On the daily charts, price has made a 38.2% correction and tested the broken 1.3840 level, we could have a continuation to the 50% or 61.8% in the area between 1.4000 and 1.4150, and then resume lower towards the 138.2% extension on the previous swing low at 1.3100, targeting previous lows as first step (around 1.3500).

GBPUSD

The Pound-Dollar fell a little more and made new lows but didn’t advance much last week, staying inside a range above and below July lows (1.5700/1.5850). The neckline of our hypothetical Head and Shoulders formation was slightly pierced and I maintain last week’s view for a medium-term bearish target to 1.5350/00.

On the daily charts, a pullback to the middle line of the Bollinger bands and 38.2% correction near round number 1.6000 is possible before resuming the downtrend and reach for an extension below 1.5500. The retracement could continue to 1.6150/60 (50%) where there is a confluence of the three moving averages.

EURGBP

The Euro-Pound retested the previous lows, breaking through and reaching the lower trend line of the ascending channel and close to the SMA200, reaching a 127% Fibonacci extension on the previous swing low around 0.8520. From this point the price resumed its bullish tone, touching the middle line of the Bollinger bands, and reached both projected targets of 0.8640 and 0.8730 where price is now sitting at the SMA34 level after Friday’s close. I would expect a bullish break and continuation towards June highs (0.9075) and the upper trendline of the channel (0.9100/50), with an intermediate target at the 0.8890 level where it can find some good resistance.

On the Daily charts, we can appreciate a rejection from SMA100 after having pierced the SMA200, and price is still inscribed into a descending channel. 0.8850 would have to be clearly broken for further upside aiming to August highs and 138.2% extension at 0.8890, then to next target at the 161.8% extension around 0.8960.