Daily Chart Art – October 15, 2010

GBP/JPY: 4-hour

GBP/JPY 4-hour Chart

Pull up the 4-hour GBP/JPY chart on your screen and you’ll see you’ve got a sexy little setup forming. Yowza! A rising wedge is in the works while price is on a downtrend. Usually, when that happens, it’s a sign that the pair will continue heading south. Stochastic seems biased towards bears, too, since it’s deep into overbought territory and is showing a bearish divergence from price. If you’re a fan of the bears, you may want to wait until price reaches the 50.0% Fibonacci retracement level before shorting. The area of 129.00 looks like a good place to bag pips in that case. But if you’re with the bull camp, it’s best to wait until candlesticks close above the trend line before you go long.

USD/CAD: 4-hour

USD/CAD 4-hour Chart

It appears that USD/CAD is starting to recover some of its losses. After the Stochastic hit oversold condition and price hit the psychological 1.0000 handle, the pair was able to find buyer interest and rally back to the broken support level at 1.0050. I don’t know about you, but this looks like a dope lookin’ retracement to me! I know, I know, the Stochastic has yet to hit overbought territory, but I just can’t ignore that hanging man candlestick pattern on the 38.2% Fib! If sellers start piling back in, look for a possible retest of former lows at parity.

EUR/USD: 1-hour

EUR/USD 1-hour Chart

Are the euro bulls tired from struttin’ with swagger on the charts yesterday? Hmmm, it doesn’t seem so. Check out how sexy EUR/USD is on the one hour chart with those Fibs! It looks like the pair could retrace some of its gains back to the 38.2% Fib, around the 1.4000 handle where it has previously found resistance. Making things even sweeter is that possible hidden bullish divergence, with price making higher lows and stochastic making lower lows. But before you bet your pips on the bulls, you may want to wait for the lines to bottom at the oversold turf first. Who knows, EUR/USD may not find support at 1.4000 and it may be the bears turn to strut their stuff today.

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