EURUSD, GBPUSD break long-term resistance but with different wave counts 2016.05.26
EUR/USD
4 hour
The EUR/USD is testing the resistance trend line of the downtrend channel (red/green). A bullish break, however, does not automatically translate into the end of the downtrend itself (see wave 4 on 1 hour chart). The 123 (purple) becomes more likely than an ABC if price manages to extend beyond the 161.8% Fibonacci target.
1 hour
The EUR/USD seems to have completed multiple wave 5s yesterday and price has now broken above a 1 hour resistance trend line (dotted red). The current retracement could be part of a wave 4 (green) which could see resistance confluence (orange box) 38.2% Fib level. A break above the 50% Fibonacci retracement level of 4 vs 3 would make a wave 4 (green) less likely.
GBP/USD
4 hour
The GBP/USD bullish price action had sufficient momentum to break above the long-term resistance trend line (dotted red). The wave count has been changed to a bullish ABC zigzag (pink) reflect the bullish breakout.
1 hour
The GBP/USD strong bullish momentum saw continuation after breaking the trend line. Price could face strong resistance at the confluence of the previous top (red) and 100% Fibonacci target of wave C vs A.
USD/JPY
4 hour
The USD/JPY failed to break above the resistance trend line (red) for a bullish breakout. The wave has been labeled as wave 5 (purple) due to the internal 5 wave structure which is visible on the 1 hour chart. A break of support (blue) would confirm the development of wave 2 (purple) correction. A breakout above the resistance would indicate an expansion of wave 5 (purple).
1 hour
The USD/JPY completed 5 bullish waves within wave 5 (blue). The 5th wave did not break the previous top which is called a "truncated" 5th wave. The current wave count suggests a bearish correction, which would be invalidated if price breaks above the 61.8% Fibonacci level of 4 vs 3. In that case, the alternative scenario is that the currently marked bearish 123 (brown) would turn into an ABC completing a wave 2 (green) as part of an extended wave 1-2 (green).
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