Daily Chart Art – July 19, 2012

USD/CHF: 1-hour

USD/CHF Hourly Chart

Swissy get low, low, low, low! Zooming in to the hourly chart, we see that the pair has been making lower highs and lower lows, forming a descending channel. But what’s this?! Stochastic already indicates that the pair is oversold. On top of that, it also shows a bullish divergence (it’s making lower lows while price is making higher lows). Could there be enough bulls at the middle of the channel to push USD/CHF back above .9800? Maybe. However, a strong close below .9775 could mean that the pair may still trade all the way down to the bottom of the channel.

EUR/USD: 1-hour

EUR/USD 1-hour Chart

Next up is EUR/USD sporting what looks like an ascending triangle on the hourly timeframe. You cool cats who have gone through the School of Pipsology probably know that this is considered as a bullish chart pattern. However, don’t get too excited buying the pair just yet! EUR/USD still has to close convincingly above resistance 1.2300. Who knows, there may still be enough bears in the market to push the pair back down to test the rising trend line.

CAD/JPY: 1-hour

CAD/JPY Hourly Chart

There’s also a similar setup on CAD/JPY. The pair has been making higher lows but hasn’t been able to trade past resistance around 78.20. As of this writing, price is testing the rising trend line. So keep tabs on it! Be on your toes for reversal candlesticks to materialize just below the 78.00 handle as they could hint that CAD/JPY will soon test the resistance level again. Meanwhile, a strong close below the trend line could mean that the pair may soon drop below 77.50.

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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