Daily Chart Art – December 2, 2009

EURJPY: 4-Hour

PoD Chart

Is it just me seeing this or is the EURJPY 4-hour chart really showing a lot of sell signals? First, the pair has consistently made lower highs and lows since the beginning of November. Second, price has currently stalled right smack on the 0.618 Fibonacci retracement level, which, coincidentally, lines up with the previous month’s lowest level. Next, stochastics is in overbought territory. Lastly, a bunch of indecisive candles have formed indicating the possibility that buyers are running out of steam. If the pair starts forming bearish engulfing candles, look for a move towards the 129.00 and 128.00. On the other hand, if the pair breaks out of its consolidation upwards, 132.00 would be its next target.

USDJPY: Daily

PoD Chart

Has the USDJPY’s drop finally come to an end? I’m not trying to be a bottom picker but it looks like the USDJPY pair is ready to stage a serious rally. Price is sitting right on the falling trend line support while stochastics is in oversold territory. More importantly, there’s the falling wedge chart pattern indicating a possible trend reversal. The crucial level to watch here is the falling trend line resistance. If that breaks, look for a move towards 92.30 and 97.80, the next major resistance levels. However, if sellers prove to be too strong and break support, the pair could go as low as 80.00, a price level it hasn’t touched since February 1995.

USDCAD: 4-hour

PoD Chart

Taking a look at the 4-hour chart, it seems that the USDCAD has been stuck in a range the past month. The pair can’t seem to break past highs around 1.0750, while it is finding major support between 1.0400 and 1.0450. After hitting the support area, it now appears that the pair could be in for a reversal, as stochastics indicate oversold conditions. Furthermore, take a look at the candlestick at the end of the recent down move – isn’t that a hammer, another sign of a potential reversal? If buyers do indeed push price back up, they could encounter some minor resistance around 1.0540 before shooting up to test highs above 1.0700. On the other hand, if selling pressure remains strong, we could see price drop to test lows between 1.0300 and 1.0200.