Daily Chart Art – September 29, 2009

USDJPY: Daily

PoD Chart

Check out that perfectly-formed doji on the USDJPY’s daily chart! This candlestick formation occurred at the bottom of the latest drop, indicating that a reversal may be in the cards. Notice that a descending trend line can be drawn connecting the highs of the pair. If the pair indeed moves on an uptrend, then it could go all the way up to retest that trend line. But if the upward momentum is not that strong, the pair’s rally could be halted at the previous high of 92.55. On the other hand, if the doji proves to be a false signal, then the pair could find support at the nearby psychologically significant levels, such as 89.00 and 88.00.

EURJPY: Daily

PoD Chart

Now, lets switch over to a daily chart on the EURJPY pair! The pair has been respecting a rising trend line since this past March. The pair did have some problems breaking past highs just above 138.50. Just yesterday, the pair touched the trend line and bounced from it! Currently, the pair is sitting near 131.50. With stochastics indicating that it may be entering oversold conditions, we may see the pair move back to the topside, where it could test previous high around 135.00 and 136.00. There are however, some bearish signals on the pair as well. For one, the pair seems to have formed a triple top. In addition, while the pair has been rising in a channel like motion, it seems that buyers are running out of strength, as the pair seems to have consolidated as the pair could not register a new high. If sellers continue to bring price back down to test the trend line and succeed, we could see some support at 130.00, near the previous low.

GBPUSD: Daily

PoD Chart

After a day’s off, I’m on to the cable again. So here we go… A daily chart of the GBPUSD pair is shown above. As you can see, the pair finally broke down yesterday from a head and shoulders formation. It sought ground at 1.5800 after breaking through the neckline and immediately sprung up towards 1.5900. Currently, it is trading just below 1.5900 and it may see this level as a minor resistance. Though, it may have enough push to move past the mentioned mark since the stochastics is indicating that conditions are already oversold. It could revisit 1.6000, which magically coincides with the formation’s neckline, if it does. On the other hand, it could fall at least down to 1.5800 again if 1.5900 holds.

  • fromJDtoFX

    BP, I have a few questions/comments about trading off of these charts. (some clarification for a newb)

    Re: USD/JPY – I noticed the hangman doji as well. But are you really going to go long against the long and intermediate down trend? What happened to “trade with the trend” that gets drilled into every newbies brain?

    GBP/USD: I had a neckline that slanted upward (that was broken last week). I thought the neckline is created by connecting the two troughs from the shoulders? (in other words, it can be flat, or slanted up/down – see, e.g., the neckline that you drew for EUR/JPY triple top, above). Is this just a case where everyone draws it differently, or am I missing something here?

    Sorry for all of the questions. I really like your blog. But I can never quite figure out what exactly you are thinking as far as trade ideas (i understand that the trade will ultimately depend on futures price action, but are you only looking for longs in an uptrend, and vice versa?). Do you always “trade with the trend”? Trend reversals? It varies? Applying your ideas to my trading, I definitely see the setups that you post, but it always seems like a trade could go either way (i.e., either short a break of the neckline, or, go long if it finds support at the neckline). Any chance you can let us know the following day whether you got into a trade, long/short, etc.

    Many Thanks.

  • BigPippin

    Unlike HappyPip, Pipcrawler and Cyclopip, my aim in my updates is to educate readers on possible price action movement rather than give out actual trade ideas. As much as possible, I try to present both sides of the coin. I think that it is important for new traders to realize that anything can happen in the Forex world. In my charts, I try to pinpoint potential support and resistance levels, chart patterns and other things that traders should take a look at. And yes, what you said about traders seeing different things on the charts is also true. In this case, we had conflicting views on GBPUSD. It’s all good!

  • BigPippin

    Unlike HappyPip, Pipcrawler and Cyclopip, my aim in my updates is to educate readers on possible price action movement rather than give out actual trade ideas. As much as possible, I try to present both sides of the coin. I think that it is important for new traders to realize that anything can happen in the Forex world. In my charts, I try to pinpoint potential support and resistance levels, chart patterns and other things that traders should take a look at. And yes, what you said about traders seeing different things on the charts is also true. In this case, we had conflicting views on GBPUSD. It’s all good!