Daily Chart Art – February 2, 2010

GBPJPY: 1-Hour

PoD Chart

Looking at a shorter time frame, we can see that the GBPJPY has been on a downtrend – notice how price is making lower highs and lower lows. If sellers keep bringing the pair down on significant levels, I think the rally we saw yesterday will prove to simply be a correction than a reversal, especially with stochastics at overbought territory… Using the Fibonacci tool, we can see that the 61.8% Fib level lines up nicely with both the falling trend line and 145.00, a major area of interest, which, gives the bears a nice sell signal. Still, this is the FX market and nothing is certain so if we do see a candle close above the falling trend line, the buyers will likely take the pair to 146.00 or even 147.00 before taking a break.

USDCHF: 4-hour

PoD Chart

After seeing yesterday’s price action, it seems that the USDCHF is trying to retrace some of its gains. This round of losses could prove to be short-lived though as the pair is slowly approaching the 50% Fibonacci retracement level. More than that, the 50% Fibonacci retracmenet level lines up with 1.0500, a major resistance-turned-support level. If you’re part of the bull camp, watch out for a bounce at 1.0500 as buyers might be waiting here to take the pair higher again. On the flip side, if you’re bearish on the pair, look for a 4-hour candle close below support at 1.0500 for a move towards 1.0365, a former low.

USDCAD: Daily

PoD Chart

Lastly, lets end with a look at the daily chart of the USDCAD. After gaining for 9 straight days, the USDCAD couldn’t break past resistance around 1.0720 and fell, forming a bearish engulfing candle in the process. With stochastic showing overbought conditions, could the pair be headed to the downside as buyers take a break? If sellers come out in force, they could bring price back all the way down past the former falling trendline to around 1.0415, which was a previous support area and also lines up with the 61.8% Fibonacci level. Looking ahead though, it seems like a double bottom has formed. If buying pressure is too strong, we could see price break resistance at 1.0720 and storm all the way up to highs near 1.1000.