It looks like dollar bulls partied like rockstars yesterday and were finally able to hustle EUR/USD past support around 1.2515. However, with Stochastic indicating oversold conditions, could it be that the rally is already losing steam? Maybe, but don’t get too excited buying the pair just yet. Who knows, EUR/USD may just pullback to around the 50% Fibonacci retracement level and potentially find resistance at the previous support area. Heck, there might still be enough dollar bulls in the market to continue pushing EUR/USD lower without any retracement!
If you’re searching for a breakout trade, look no further than USD/JPY! The pair has been consolidating around 79.50 since the start of the week. Actually, if we connect its most recent highs and lows, we can see a symmetrical triangle. Now, if you’re feeling bullish for the pair, you may want to wait for a close above yesterday’s highs around 79.65. However, if you dig the yen more than the dollar, waiting for a close below yesterday’s low at 79.37 might be a good idea before pulling the trigger.
Last, but certainly not the least, here’s GBP/JPY on the 4-hour timeframe. From the looks of it, it seems that the pair could be forming a falling wedge. If you’ve been through the School of Pipsology, you probably know that this particular chart pattern is taken as a bullish signal. But you know what makes Guppy even more enticing to bulls? That bullish divergence that materialized with Stochastic making higher lows while price is making lower lows! Don’t get too giddy buying the pair though. A strong break of 124.00 could mean that GBP/JPY will soon drop to 122.50.
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.