Daily Forex Chart Art – July 24, 2014

AUD/JPY: 4-hour

AUD/JPY 4-hour Forex Chart

AUD/JPY 4-hour Forex Chart

Will it be a bounce or a break? AUD/JPY is gearing up to test the top of the ascending triangle on its 4-hour forex chart. Stochastic is already indicating overbought conditions, which means that Aussie bears are ready to push price back down. Take note that the top of the triangle lines up with the 96.00 major psychological level, which might continue to hold as resistance. In that case, price could drop back to the bottom of the triangle around 95.00. If price makes a breakout though, the resulting rally or selloff might last by as much as 500 pips, which is the same height as the chart pattern.

USD/JPY: 4-hour

USD/JPY 4-hour Forex Chart

USD/JPY 4-hour Forex Chart

Here’s an update on the USD/JPY descending triangle pattern that almost everyone’s been watching for the past few weeks. Guess what? Price is still stuck inside the triangle! Buyers and sellers just refuse to give way, as the consolidation keeps getting tighter and tighter. A breakout is bound to happen sooner or later, with the potential rally or selloff lasting by as much as 300 pips. Make sure you wait for a strong break below the 101.00 handle if you’re planning to short or a close above the 101.50 area if you’re looking to go long. Be wary of fakeouts as well!

CHF/JPY: 4-hour

CHF/JPY 4-hour Forex Chart

CHF/JPY 4-hour Forex Chart

Looks like a new triangle is about to form on this one! CHF/JPY has been making lower highs and finding support at the 112.50-113.00 area, creating a descending triangle chart formation. The support area might hold once more, as a bullish divergence has formed, with price making lower lows and stochastic drawing higher lows. A bounce could last until the triangle resistance at the 113.50 minor psychological level, while a downside break could mean as much as 600 pips in losses for the pair. Make sure you review our lesson on trading divergences if you’re thinking of buying.

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.