Daily Chart Art – August 12, 2011

AUD/JPY: 4-hour

AUD/JPY 4-hour Chart

After that steep drop we saw last week, AUD/JPY has consolidated a bit and is now forming a bearish pennant. The question is, which way will this playa break out? If you’re bullish on the pair, I suggest waiting for a candlestick close above the 80.00 handle before going long. However, if you believe that the recent down move will continue, look for a strong marubozu candlestick close below the rising support line as a sign that the bears are in control.

CAD/JPY: 4-hour

CAD/JPY 4-hour Chart

Next up, we have what I like to call the J-LO on CAD/JPY. By that, I mean double bottoms! After falling more than 500 pips from its highs earlier this month, the pair has found good support at the 77.00 handle. With bearish divergence forming, we could see a bullish run some time soon. Watch out though, for the potential neckline resistance at 79.00. We may see a few tests of that level before price truly breaks through.

GBP/CHF: 4-hour

GBP/CHF 4-hour Chart

Lastly, here’s a look at GBP/CHF. Now, I don’t normally showcase this pair, but this time, I couldn’t help but notice this sweet setup forming on the 4-hour chart! After zooming to all time lows, the pair has retraced a bit and is now testing the 1.2400 level. Take note that this level served as a strong support of a former descending triangle. Could it now serve as support-turned-resistance? With Stochastic in overbought territory and a doji forming right smack at resistance, the bears may jump in soon!

Before you get carried away with all these chart patterns, remember that technical analysis is only half the story.

To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.

Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals. Check him out, playas!