Daily Chart Art – August 23, 2012

EUR/JPY: 4-hour

EUR/JPY 4-hour Chart

Is a breakout in sight for EUR/JPY? The pair has been stuck inside a rising wedge on its 4-hour time frame, and it seems that euro bulls are running out of energy to carry on with their rallies. After hitting resistance at the top of the wedge, EUR/JPY is on its way back down as confirmed by stochastic. If the bottom of the wedge acts as support, we might see the pair bounce right back up to test the top again. Otherwise, a downside breakout might be in the works!

AUD/USD: 4-hour

AUD/USD 4-hour Chart

One bottom, two bottoms, ha! That’s a double bottom chart pattern right there! If you’ve been a good student in our School of Pipsology, you’d know that a double bottom usually signals a reversal from the previous downtrend. Be mindful though, that AUD/USD must first break above that neckline before it can head north. Note also that stochastic is almost in the overbought region, suggesting that Aussie bulls could run out of steam pretty soon.

EUR/USD: 1-hour

EUR/USD 1-hour Chart

After making a strong upside breakout from its previous range, EUR/USD is back in consolidation once more! Could that be a bullish flag? It looks like euro bulls are revving up for further rallies, but make sure to wait for a candle to close above the 1.2250 minor psychological resistance before joining ‘em! Don’t forget that stochastic seems ready to cross down from the overbought zone, which means that euro bears could take over in a while.

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.

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