EURUSD and USDJPY shallow pullbacks expected, GBPUSD huge momentum 2016.05.25
EUR/USD
4 hour
The EUR/USD downtrend channel (red/green) remains intact and yesterday price broke another bear flag chart pattern (dotted green). Price has now reached the 127.2% Fibonacci target. Both an ABC (blue) or a 123 (purple) are possible but the 123 (purple) becomes more likely as price reaches lower Fibonacci targets especially if price goes beyond the 161.8%.
1 hour
The EUR/USD broke the support trend lines (green) and showed an impulsive bearish wave 3 (purple). The current retracement could be part of a wave 4 (purple) which could see resistance confluence at the trend line (red). A break above the 4 vs 3 Fibonacci levels would invalidate wave 4 (purple).
GBP/USD
4 hour
The GBP/USD is struggling to find a long-term direction considering the contracting triangle (green/red). Yesterday's bullish price action seems to have strong momentum but price has reached a long-term resistance trend line (red). The wave labels could change depending on the direction of the triangle breakout. A break above the long-term resistance trend line (red) and the 100% Fibonacci level invalidates the current wave count where a bigger bearish ABC (pink) or 123 (purple) is expected. A break below support makes an ABC (or 123) more likely.
1 hour
The GBP/USD showed strong bullish momentum after the break of the trend line (dotted orange) via an ABC (blue) as was indicated in yesterday's wave analysis. The bullish momentum would normally suggest a bullish continuation today but price is at a strong resistance level. A bullish break would break the triangle and invalidate the bearish wave count.
USD/JPY
4 hour
The USD/JPY seems to have completed a wave 4 (purple) and is now continuing as part of a wave 5 (purple). A break above the resistance trend line (red) would confirm the breakout towards the Fibonacci targets.
1 hour
The USD/JPY is approaching the Fibonacci retracement levels. A break below the 61.8% Fib would invalidate the 5 wave structure (orange) as wave 4 would retrace into the price territory of wave 1.
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