Daily Chart Art – February 1, 2012

EUR/USD: 4-hour

EUR/USD 4-hour Chart

Is that a head and shoulders pattern I’m seeing on EUR/USD’s 4-hour chart? Why, that could mean that the euro’s rally is about to fizzle fo’ shizzle! According to my handy-dandy Chart Patterns Cheat Sheet, this formation typically signals a reversal in the uptrend and that the pair’s drop could be the same height as that of the formation. In this case, EUR/USD might be in for a hundred-pip drop!

GBP/USD: 1-hour

GBP/USD 1-hour Chart

Here’s a potential retracement play with GBP/USD. After breaking above the resistance around 1.5735, the pair seems to be pulling back as pound bulls wait for more traders to join their pack. I drew some Fibs and noticed that the former resistance level is right in between the 38.2% and 50% Fibonacci retracement levels. Stochastic is still pointing downwards though, which suggests that the pair has room to fall further.

USD/CHF: 1-hour

USD/CHF 1-hour Chart

One bottom, two bottoms, ha! That’s a double bottom pattern right there! This could mean that USD/CHF is done sliding and could start an uptrend soon. The pair is still stalling at the formation’s neckline, which means that it’s still a toss-up between an upside breakout or a drop back to the .9100 area. Make sure you drop by the School of Pipsology to review the lesson on trading breakouts before you enter any trades!

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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