With EUR/USD falling more than 500 pips from last week’s high, it looks like the dollar has been rock ‘n’ rollin’ on the charts like my brotha Jay Sean, huh? However, with a bullish divergence that materialized just before the pair tapped the 1.4300 major psychological handle, I’m not to sure if the dollar will be able to continue its pip-streak. Bulls could be revving up to push the pair back up to 1.4900! However, if you think it ain’t over for the dollar yet, keep an eye out for the 38.2% Fibonacci retracement level as EUR/USD may just retrace some of its losses before continuing its slide.
Remember that sexy head and shoulders pattern I pointed out last week on GBP/USD? Well, it looks like there were enough bears to push the pair below the neckline support. Now, however, it that the pair is stuck like glue in the support area just below 1.6400 where it has previously found resistance. That regular bullish divergence ain’t making things look good for the sellers either. Because the School of Pipsology cites that this is usually taken as a reversal signal, watch out for bullish candlesticks these could mean that the pair will rally up to its previous high at 1.6700! Don’t get too excited though, the dollar may still have something up its sleeves. Be on your toes for a strong bearish candle below 1.6370 as this could mean that the pair will continue trading lower.
Last on today’s lineup is USD/JPY which is testing resistance at the 38.2% Fibonacci retracement level. If you’re already thinking of shorting the pair, you may want to hold up a bit! With the Stochastic still not in the overbought area, we may see the pair trade higher and test the falling trend line around the 50% Fibonacci level before it resumes its fall. Heck! If there are enough dollar bulls around, the pair may even skyrocket past 82.00!
Now, I know the setups I present daily are wicked-sick. But before you get carried away with all these chart patterns and candlesticks, 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.