Daily Chart Art – May 16, 2012

USD/CHF: 1-hour

USD/CHF 1-hour Chart

Is that a bullish flag I’m seeing on USD/CHF’s 1-hour time frame? The pair just staged a strong rally yesterday but dollar bulls seem to be catching their breaths for now. According to the School of Pipsology, this type of formation typically hints at a potential upside breakout, which is usually the size of the initial climb. In this case, it’s about 75 pips. Make sure you keep your eyes glued to this pair if you’re thinking of catching a breakout!

USD/CAD: 4-hour

USD/CAD 4-hour Chart

USD/CAD is still on a steady uptrend with a rising channel forming on its 4-hour chart. The pair has been crawling up that channel for the past couple of weeks and appears to be aiming for the top again. Stochastic is already in the overbought zone, suggesting that Loonie bulls could charge soon. Watch out for that potential resistance at the top of the channel, which is in line with the 1.0150 minor psychological level.

GBP/JPY: 4-hour

GBP/JPY 4-hour Chart

Last but not least, here’s another potential breakout scenario for GBP/JPY. The pair has been consolidating inside a symmetrical triangle on its 4-hour time frame, as pound bulls and bears are currently battling it out. Stochastic is on middle ground, which means that either side has a fair chance. The triangle is approximately 100 pips in height, so GBP/JPY could rally or drop by the same amount. Be careful of fakeouts if you’re playing this one!

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.