FX.co ★ Trading Plan for EUR/USD and GBP/USD for May 24, 2017

Technical outlook:

The EUR/USD bullish story continued until yesterday with the 3rd wave extension hitting into 1.1263 levels before reversing lower. The pair has broken its immediate support trend line on the hourly chart and is on the verge of breaking its first price support at 1.1161 levels as well. We can expect a pullback after that and it could well be an opportunity to sell again for a drop at least towards 1.1000 levels at least. Please note that if EURUSD continues to drop further below that, it might indicate that a meaningful top is in place at 1.1263 levels and that the long term downtrend has resumed. Also please note that the pair has formed an engulfing bearish candlestick pattern on Daily chart (not seen here), which might just be the beginning of a meaningful correction or resumption of the long-term downtrend.

Trading plan:

Look to sell through 1.1210/30 levels, stop above 1.1265, target 1.1000

GBP/USD chart setups:

Technical outlook:

The GBP/USD pair continues into consolidation after printing highs at 1.3047 levels and dropping in an impulse manner. The movement after that could be a contracting triangle unfolding into 5 waves labeled a through e, which might be complete at 1.2999 or might print yet another lower high below 1.3030 levels before reversing lower. It is more clear that until prices remain below 1.3047 levels, GBPUSD should be looking lower. A break below 1.2950 will accelerate downside into wave 3, which should drag prices lower well below 1.2800 levels. Only a break above 1.3047 levels, would delay matters for the bearish trend to resume. Resistance should be strong during any intraday rally towards 1.3010/20 levels, while immediate support is at 1.2950 levels respectively.

Trading plan:

Please look to remain on short side, stop above 1.3047 levels, target is at least 1.2800 levels.

Fundamental Outlook:

Watch out for two major events lined up today with ECB President Draghi speaking around 08:45 AM EST and FOMC later around 02:00 PM EST.

Good luck!