First up, let’s start with a look at the daily chart of USD/JPY. Lately, the pair has been trading within a descending channel, bouncing off the falling resistance and support lines. With price fast approaching the top of the channel, could we see another reversal take place? Keep an eye out for any suspicious candlesticks. If we see any dojis or reversal candles, it could be a sign that a reversal is imminent and the pair is headed for news lows at 82.00. On the other hand, a solid green marubozu that closes above the channel could be a sign that this pair is headed for new highs above 83.50.
Aha! With a couple of dojis and a hanging man, it looks like EUR/USD is testing resistance at the 1.3400 handle. Stochastic, being in the overbought area, hints that the pair may pull off an R. Kelly and just bounce-bounce, bounce-bounce from the falling trend line and retrace some of its gains back to the 61.8% Fib. But don’t get too giddy in shorting the pair just yet! Who knows, EUR/USD could do a Taio Cruz instead and stage a break, break above the trend line, and rally all the way to 1.3750.
There’s a similar setup on EUR/CHF with the pair looking like it took a chill pill from its upward rally, just stayin’ fly at 1.2900. However, with Stochastic indicating that the pair is already overbought, it seems like it won’t be long until EUR/CHF tumbles back to the 50.0% Fib, around 1.2700. You may want to wait for more confirmation though. A bullish candle above 1.2900 may just mean that EUR/CHF is going to skyrocket to 1.3000.