Daily Chart Art – January 25, 2012

USD/CAD: Daily

USD/CAD Daily Chart

The first setup I’ve got for ya’ll is a potential break of support at USD/CAD. As you can see, the daily chart shows that the pair has been consistently making “lower highs.” This indicates that there has been a strong bearish presence, and even though the bulls have managed to keep support around the 1.0070 level intact, they are starting to give in. If you’re bearish on the pair, look for a strong close below the major support level to confirm your directional bias.

GBP/JPY: Daily

USD/CAD Daily Chart

Calling all the bulls! The falling trend line on the long-term time frame of GBP/JPY has finally broken! What does this mean? Well, given the extremely strong close above the 120.00 handle and the falling trend line, we could see the pair’s rally strengthen even further as more stops are hit. If you’re jumping in, please be wary of possible reversals. The Stochastic just hit overbought territory and the last swing high at 122.78 could provide tough resistance.

EUR/GBP: 4-hour

USD/CAD Daily Chart

Uh oh, it seems that a rising wedge has appeared on EUR/GBP’s 4-hour chart. A rising wedge is normally considered bearish, and warns that a possible downside break may happen. In this case, we’re looking for a break of the bottom rising trend line as price squeezes into the tip of the formation. Don’t sell too quickly though! Wait for confirmation in the form of a candle close below the wedge.

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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