It looks like euro bulls have been out partying the past week, as they have failed to stem the huge drop in EUR/USD over the past 6 days. After topping out at 1.4550 early last week, EUR/USD is now down over 500 pips! Now that the pair is sitting at the 1.4000 support level, is it time to sober up? An inverted hammer has formed while Stochastic is showing oversold conditions, which may mean that selling pressure could be coming to an end. Still, it might be best to wait for a bullish candle close before establishing any long positions.
Next up, here’s a simple setup on Cable. After spiking up to touch the 1.6200 handle yesterday, traders dropped Cable like a bad shot of tequila and the pair fell more than 200 pips. It is now consolidating around the 1.5950 level and seems to be forming a bearish pennant. A break below yesterday’s low of 1.5922 may be a sign the the pair is headed for new lows.
Now, I know this pair barely moves, but it seems that USD/JPY is finally making its way up the charts! The pair has slowly crawled up and just tested resistance at 77.70. However, with Stochastic showing overbought conditions, we may see sellers drag the pair back down to test the rising support trend line at around 77.00.
To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.