Daily Chart Art – July 31, 2012

GBP/USD: 4-hour

GBP/USD 4-hour Chart

Bounce, bounce, bounce, bounce… GBP/USD has been moving inside a 300-pip range for more than a month already, as the pair found support near 1.5450 and resistance around 1.5750. After making a strong bounce off the bottom of the range last week, GBP/USD started forming a few reversal candlesticks at the top. At the same time, stochastic is making its way out of the overbought region, suggesting that pound bears are ready to pounce.

AUD/JPY: 4-hour

AUD/JPY 4-hour Chart

After staging a stellar 250-pip rally last week, AUD/JPY seems to be stalling at the 82.15 resistance as Aussie bulls pause to catch their breaths. This resistance level has held for a couple of times in the past but the question is: Will it still hold this time around? Stochastic has just crossed out of the overbought zone, which means that it could be time for the sellers to take over. If AUD/JPY decides to drop it like it’s hot, it could make its way back to its former lows near 79.50 or at least until the 80.00 major psychological support.

USD/CAD: 4-hour

USD/CAD 4-hour Chart

Guess what? The USD/CAD descending channel that Happy Pip has been watching for quite some time is still very much intact! The pair is currently making its way to the bottom of the channel, which is near the 1.0000 mark. On top of that, stochastic is deep in the oversold zone as dollar bears are probably exhausted from that 200-pip dive last week. If you’re counting on a bounce, it might be better to wait for stochastic to cross upwards first and make sure you set those stops right!

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.