Daily Chart Art – February 16, 2012

EUR/JPY: 1-hour

EUR/JPY Hourly Chart

Do I just need to clean my Ray B’s or is that a bearish rectangle I see on EUR/JPY? Nah, I think it’s the real deal! It looks like the pair is now consolidating after it fell sharply from yesterday’s high. If you’re planning to trade the pair, it might be safer to wait for a break out rather than jumping in at market. Shorting below yesterday’s low around 102.15 would probably be a good idea. On the other hand, if you’re planning to go long, watch out for an upside break from the consolidation, around 102.70, as this would probably mean that the pair is on its way back above 103.00.

EUR/USD: 4-hour

EUR/USD 4-hour Chart

Whoa! Don’t look now but after yesterday’s euro sell off, EUR/USD is once again back to trading at last week’s lows! Will it bounce from the resistance-turned-support area at 1.3030? Stochastic, being in the oversold area, hints that it might. However, I wouldn’t be so excited to see EUR/USD rally back up just yet. I’d wait for reversal candlesticks (e.g. dojis, marubozus, hammers, and inverted hammers) for confirmation first. Who knows, there may still be enough bears to push the pair to its previous low at 1.2950.

USD/CAD: 1-hour

USD/CAD 1-hour Chart

Are you a big fan of range plays? If you are, check out USD/CAD on the hourly timeframe because it looks like the pair is almost at the top of the range! With Stochastic indicating overbought conditions for the pair, some of y’all might be tempted to sell already. That’s not a bad idea but if you prefer to play it safe, you may want to think about waiting for reversal candlesticks first. For those who think that the dollar rally will continue, a close above last week’s high at 1.0040 could signal that the pair is on its way up to 1.0100.

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.