Let’s kick off today’s show with a look at the AUDJPY cross pair. After hitting an uptrend to end 2009, the pair seems to have formed a head and shoulders formation, with neckline support at the 83.35 price level. It seems that price action has broken past the support level and is just hanging around the 83.00 price handle right now. Will the downmove continue? If sellers are successful, they could bring price down to test potential resistance turned support around 82.00. On the other hand, if this is just a false alarm, look for the pair to jump back and test the falling trendline at around 84.00.
It looks like the GBPJPY is attempting form a huge symmetrical triangle formation. A symmetrical triangle formation usually signals that a breakout is looming just around the corner. Notice how the trading range gets tighter and tighter as price approaches the narrow tip of the triangle. For the mean time, however, a soft bounce around upper bound trend line resistance at the 149.00-149.20 region is likely. Still, if buyers manage to stage a breakout and bust out of the formation, look for a move towards former highs at 150.00.
Are those spinning tops I see sitting on 91.20, a support-turned-resistance price level and a major area of interest? I don’t know about you but it looks like this upward retracement move is running out of steam, as stochastics has just headed out of overbought territory. If sellers start taking control of the pair again, expect a retest of former lows around the 90.00-90.30 region. On the other hand, if 4-hour candle closes above 91.20, the pair’s next would be 92.00.