Daily Chart Art – December 17, 2010

GBP/USD: 4-hour

GBP/USD Chart

Crack! After trading in a nice little upward channel for a week or two, Cable finally broke out and fell convincingly to former lows. Support is holding for now, but for how long?!? As you can see, Cable is fast approaching the 1.5700 psychological barrier and 50% Fibonacci retracement level, which means we could see the bears “sell the rallies” and drag the pair lower again. Let’s see how price reacts once it reaches that level!

NZD/USD: 4-hour

NZD/USD Chart

Now, let’s get and update on the head and shoulders that I pointed out on NZD/USD last week. With yesterday’s candle closing as a long-legged doji at a previous resistance area, it looks like Kiwi buyers are getting ready to show the us how to dougie! You may want to wait for a convincing break above the .7500 before you start rooting for them though. Because who knows, the bears could only be revving up for their run to push the pair down to .7350.

EUR/JPY: 4-hour

EUR/JPY Chart

Yesterday, I pointed out a rising trend line on the 1-hour chart of EUR/JPY. Now, let’s zoom out a bit and check out that ascending channel on the 4-hour time frame! Hmmm, it looks like bears have been struttin’ with swagger, trying to push the pair past the support at the bottom of the channel. If they’ve got enough hustle left, it looks like EUR/JPY could tumble to 110.50. But wait! I think I see a hidden bullish divergence with Stochastic being already in the oversold turf and forming lower lows, while price is making higher lows. It seems like bulls are looking to take control of the pair and bring it back up to the 112.00 handle.