Forex

EUR/USD & USD/JPY Developing ABC Zigzag Formation

October 21, 2015

3 min read

Christopher Svorcik

Analyst

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EUR/USD

4 hour

The EUR/USD broke the resistance (dotted red) and has moved up towards the 38.2% Fibonacci level of wave 2 (orange). Typically waves 2 tend to see deep retracements on average, which could see price move towards the 61.8% or 78.6% Fibs. A break of support (olive green) could trigger the start of a bearish breakout whereas a break above the 100% level invalidates the 1-2 (orange).

1 hour

The EUR/USD break above resistance (dotted red) can be considered impulsive, which in turn increases the likelihood of an ABC zigzag (pink) development within the wave 2 (orange).

GBP/USD

4 hour

The GBP/USD is struggling at the resistance trend line (red) and it has more resistance at the 78.6% and 88.6% Fibonacci retracement levels. A move up towards that level could complete the expected ABC formation (green). A break above the 100% level invalidates the wave 1-2 (orange).

1 hour

The GBP/USD has 2 different scenarios: 1) price has completed the wave 5 (blue) at the recent top, which most likely would be confirmed once break below the triangle support (green) or 2) price will building an ending diagonal (grey 123) within wave 5 (blue).

USD/JPY

4 hour

The USD/JPY broke the resistance levels (orange/red) and thereby made a bullish break above the ascending wedge. The invalidation level of the wave 2 (purple) is at the previous top (purple line).