Daily Chart Art – August 5, 2011

USD/JPY: Daily

USD/JPY Daily Chart

Can USD/JPY sustain its rally? It looks like the 80.00 handle is acting as tough resistance for the pair, which could be forced to crawl back down to its former lows around the 77.00 mark. Coincidentally, the 80.00 level lines up with a broken support level and also the 61.8% Fibonacci retracement level, which means that the barrier could be thrice as strong. Yikes! However, stochastic is still pointing upwards, suggesting that dollar bulls could have enough strength to take the pair higher.

GBP/JPY: 4-hour

GBP/JPY 4-hour Chart

Woah, what a rally by the guppy! Thanks to the BOJ‘s intervention yesterday, GBP/JPY broke past the 128.00 resistance level, which has been holding the pair back for a while. Pound bulls probably needed to pause and catch their breath after that strong run so guppy could pull back to the 128.00 mark, which coincides with the 38.2% Fib level. If that area holds as support, GBP/JPY could be well on its way to test its recent highs near 131.00. But if any of the Fibs fail to prop the pair up, GBP/JPY could slide back to the 125.00 area.

CAD/JPY: 1-hour

CAD/JPY 1-hour Chart

It’s over! The downtrend on CAD/JPY, that is. The pair just broke above the falling trend line on the 1-hour chart when the Japanese central bank intervened in the forex market yesterday. CAD/JPY seems set to confirm that the downtrend is indeed over by retesting the broken trend line, which intersects with the 61.8% Fib level. Stochastic is already in the oversold area, suggesting that buyers are about to jump back in action. If the broken trend line and the 61.8% Fib hold as support, CAD/JPY could resume its climb. On the other hand, if the pair falls way below these levels, it could be in for another downtrend.

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!