Charts of the Week: GBP short squeeze continues; GER30 gains momentum

Market Analysis /
16 Oct 2019

GER30 has gained decent momentum and is currently testing a major resistance level at 12.660 resistance. The index has been lagging behind the US indices for a while. However, now that the chances of a trade deal between the USA and China are improving, and the ECB is preparing further monetary policy, the GER30 might catch up. A clear break above the 12.660 level could pave the way for a rally towards 12.820 resistance.

GER30
GER30

GBPUSD broke above the 200 DMA, as traders are starting to price in the possibility of a deal between the EU and UK. A daily close above the 200 DMA would be a bullish sign, and the next bull target would then be 1.2840. Speculative positioning is still skewed to the bearish side, so there is potential that the short squeeze may extend well beyond the 200 DMA.

GBPUSD
GBPUSD

USDJPY is slowly approaching the 200 DMA around 109. A clear break above that level could signal an extension of the rally towards the psychological resistance level at 110. The currency pair is benefiting from renewed Dollar strength, as well as an increase in risk appetite in global markets.

USDJPY
USDJPY

Positive market sentiment should also benefit AUD/JPY, which is approaching the falling trendline from the June high. Should the currency pair clear that obstacle, the next bull target would then lie at 75.00. To the downside, traders will be keeping an eye on the 21 DMA and 71.75 support.

AUDJPY
AUDJPY

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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