What usually occurs after you spot a head and shoulders pattern? A breakout, of course! Yesterday, EUR/USD dropped like a rock after it had formed a very visible head and shoulders pattern on the 1-hour chart. If you were unable to jump in and sell the pair, then don’t ya worry, because EUR/USD looks like it is revving up for another move down. As you can see, EUR/USD has managed to make its way back to the broken neckline support. This could be a good chance for the latecomers to sell the reversal!
Speaking of reversals, USD/CHF seems to be in the middle of one. The pair, after consolidating for three whole days just above .8300, popped up yesterday and formed a bullish engulfing candle on the daily . Could this mean that the downtrend is over? If you’re REALLY bullish on the pair and want to risk it, now is a great time to buy. Do be careful of the .8550 level though, as it served as support before. Once price passes through a major support level, that level usually becomes resistance.
Of course, what’s a Big Pippin update without a lovely Fibonacci retracement setup? If you look at the 4-hour chart of USD/JPY, you’ll see that the pair is on retracement mode as it makes its way to the 50% Fibonacci retracement level. With the Stochastic about to hit overbought territory, we could see the pair continue with its downtrend soon. Watch the 50% Fib carefully folks, as it could very well serve as a major resistance level!
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 Economic Roundup. Check him out, playas!