First up is my favorite kind of forex play… The break-and-retest setup! GBP/JPY just broke below a support zone visible on its 1-hour time frame, but the pair is showing signs of pulling back after dipping close to the 170.00 mark. A retracement could reach until the 50% Fibonacci level, which is in line with the broken support area. Stochastic is still moving higher, suggesting that there’s enough buying pressure left for a retracement until the 171.50 minor psychological level.
Think the trend is your friend? Then you should have a look at this possible trend play on CAD/JPY’s 1-hour forex chart. The pair just bounced off the bottom of the rising channel, indicating that the uptrend might still hold. A rally until the top of the channel near the 94.00 major psychological resistance could take place, but stochastic has already reached the overbought area, indicating that buyers are already exhausted. Another test of the channel bottom or a downside break might be in the cards if Loonie sellers take control of price action.
If short-term setups ain’t your cup of tea, then you might wanna look at this swing setup on USD/JPY instead. A descending triangle pattern has formed on the daily time frame, as price made lower highs and found support just above the 101.00 major psychological level. The pair is currently testing the triangle bottom with stochastic almost in the oversold area, suggesting that a quick bounce could happen. Do stay on your toes for a breakout in either direction though, as the selloff or rally could last by as much as 400 pips!
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.