Daily Chart Art – December 7, 2010

USD/JPY: 4-hour

USD/JPY Chart

USD/JPY is probably feeling patriotic today because it’s waving a flag on its 4-hour chart. Notice how the pair made a sharp drop then consolidated? Well, that’s a bearish flag, which signals that the pair’s dive could resume anytime soon. If it does, it could fall until the resistance turned support level around 81.80. However, Stochastic is giving a different signal since it is already in the oversold area. This means that buyers could take over and carry the pair back up to its recent highs near 84.40.

GBP/JPY: 1-hour

GBP/JPY Chart

Kids, better whip out your concealers because GBP/JPY looks like its about to break out! See how the pair is forming lower highs while constantly retesting support near 129.50? That formation is called a descending triangle and is usually formed right before price drops. Before you pull the trigger and go short, you should probably wait for a candlestick to close below 129.50. But just because this pattern favors a break to the downside doesn’t mean a bull run is impossible. There’s always a chance price will break upwards and shoot back up to 131.00.

EUR/JPY: 4-hour

EUR/JPY Chart

Here’s one for you to keep tabs on! EUR/JPY was recently rejected (I feel for you, bro!) at 111.00 and is now down in the dumps. The question is, will we see it retest support at 108.50? Right now, the sharp selloff seems to have let up as Stochastic is signaling overselling. Then again, this could be a sign that the pair is already prepared to pick itself up and give 111.00 another shot. I guess we’ll just have to wait and see how this drama will unfold!