Daily Chart Art – October 21, 2011

GBP/USD: 1-hour

GBP/USD 1-hour Chart

What do you get when you combine a resistance level and a slope of higher lows? You guessed it – an ascending triangle! The way I see it, there are several ways that you can play this setup on GBP/USD. You can either play a bounce off resistance at 1.5850, go long on a rebound off the rising trend line, or wait patiently for the triangle to break. But no matter which route you decide to take, be sure to wait for confirmation from candlesticks!

USD/CAD: 1-hour

USD/CAD 1-hour Chart

Here’s another one for ya! USD/CAD‘s price action seems to suggest that a breakout is in the works. Take a look at how its price range is getting narrower and narrower! With symmetrical triangles like this, we can’t be sure what direction the breakout will be, but we do know that the market will most likely break out. Who will take control, the bulls or the bears?

EUR/JPY: 1-hour

EUR/JPY 1-hour Chart

Rounding up our list of triangles is EUR/JPY! Check out the descending triangle on this bad boy! Over the past week or so, price has been forming lower highs while finding support at the 105.00 major psychological handle. Since descending triangles tend to lead to bearish moves, you can take advantage of this setup by shorting upon a retest of the falling trend line. You may also want to consider playing the break of support at 105.00. But be careful because we can never rule out the possibility of an upside breakout!

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.