Daily Chart Art – January 5, 2011

EUR/USD: 4-hour

EUR/USD Chart

No need to rub your eyes, playa! You really ARE seeing double! EUR/USD is in the process of completing a double top formation. The only thing missing is a breakdown of the resistance-turned-support level in the area of 1.3270. Stochastic isn’t in oversold territory yet, so there might be room for the pair to fall further. Before you pull the trigger and go short, it would probably be best to wait for a solid, bearish candlestick to cross support. But it’s important to stay mentally flexible because price might bounce off this level and climb up to 1.3450 once again.

GBP/USD: Daily

GBP/USD Chart

Been waiting for a chance to short the pound? Well, it looks like you’ll get your chance! Price is slowly approaching the falling trend line that has formed on the daily chart. And what do you know, it’s right in the middle of key Fibonacci retracement levels! Of course, there’s a possibility that the pair may bust through this trend line and rise back up to 1.5900. To limit your chances of getting burned by a breakout, wait for confirmation in the form of bearish candlesticks and/or overbought Stochastic before acting.

USD/CAD: 4-hour

USD/CAD Chart

Ohhh, will you look at that! USD/CAD seems to have found some serious resistance as an inverted hammer candlestick pattern has formed right on the 38.2% FIbonacci retracement level. Also note that the 38.2% FIbonacci retracement level nicely coincides with parity, a very significant psychological number and support level. With the Stochastic doing a bearish crossover, does this mean we’ll be seeing USD/CAD take another trip down the charts? Hah, nothing’s for certain, but technicals and price action do hint that we could see a bearish move soon!

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