The EURJPY went on a crazy ride yesterday, as it was all over the place. After testing the 134.50 handle, the pair shot down, hitting as low as 131.21. Once it hit that bottom, the pair rose, and is now sitting just below the 134.00 price area. The pair could be experiencing some resistance at this area because of the psychological resistance of the 134.00 handle. This area also lines up with the 0.761 Fibonacci retracement level. Furthermore, intersection of the previous uptrend line and downtrend line may provide downward pressure on the pair. Take note that it appears that some bearish divergence is forming, with price registering lower highs, and stochastics showing higher highs. Will resistance hold? If it does, we may find some support at 132.50. If it breaks the resistance, it may test for new highs near 135.00.
If you’re wondering how the symmetric triangle on the USD/CHF 4-hour chart panned out, well, here’s an update! The pair thought it needed a break after bouncing up and down from the top and bottom of the triangle… And break it did! The pair pierced through the bottom of the triangle as it drew a long red candle on the way down. The stochastic is currently resting at the oversold region, signaling that the price is ready to bounce back. It could encounter some resistance around 1.0700, a psychologically significant level which somehow intersects the bottom of the triangle. But if the pair decides to don its Apple Bottom jeans and boots with the fur and go low, low, low… Then it could hit the floor at 1.0600, another psychological level.
Whoa, we’re getting mixed signals on the USDCAD chart. On the one hand, a bullish divergence seems to have formed indicated by the lower highs in price and lower lows in stochastic. This means that there is some buying power waiting to be unleashed… possibly when support at 1.0900 is hit. On the other hand, chart pattern guys probably see a rising wedge! A rising wedge indicates that a market reversal is in the cards. Given these, two possible scenarios present themselves. If you’re a divergence dude and believe that 1.0900 would hold, the next upside targets for the pair would be the 1.1100 region and rising trend line resistance around 1.1200. If you’re a chart pattern guy and believe 1.0900 would break, the pair’s next stop south would be support at the previous week’s low at the 1.0800 area.
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