Daily Forex Chart Art – May 9, 2014

EUR/USD: Daily

EUR/USD 4-hour Forex Chart

EUR/USD Daily Forex Chart

Finally some movement on EUR/USD! The pair has been moving inside a rising wedge on its daily time frame and has recently found resistance at the top of the forex formation. Stochastic is reflecting selling pressure, which suggests that EUR/USD might keep dropping to the bottom of the wedge. If euro bears are up for it, they could even push for a downside break and possibly a multi-hundred pip selloff until the next long-term support near 1.3200.

USD/JPY: Daily

USD/JPY Daily Forex Chart

USD/JPY Daily Forex Chart

Here’s another potential breakout play! USD/JPY has been making lower highs and finding support at the 101.00 major psychological level, creating a descending triangle pattern on its daily forex chart. The pair is moving closer to testing the bottom of the formation once more and if it breaks down, USD/JPY could drop by as much as 400 pips, which is the same height as the chart pattern. Be careful if you’re planning to short since stochastic already in the oversold region!

GBP/USD: 4-hour

GBP/USD 4-hour Forex Chart

GBP/USD 4-hour Forex Chart

If you missed the actual breakout on Cable, don’t fret! You could still have a chance to hop in the rally by waiting for a pullback. Using the handy-dandy Fib tool on the latest swing low and high on the 4-hour chart shows that the 38.2% level lines up with an area of interest and the 100 SMA. Stochastic is indicating oversold conditions, which means that pound bulls are already well-rested and are ready to charge again. Stay on your toes for a shallower retracement though, as the uptrend seems very strong!

Chart Settings

Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line

To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.