Daily Forex Chart Art – Aug. 28, 2014

USD/JPY: 1-hour

USD/JPY 1-hour Forex Chart

USD/JPY 1-hour Forex Chart

Looks like USD/JPY is getting tired from all that climbing! The pair has formed a head and shoulders pattern on its 1-hour forex time frame, suggesting that a reversal might take place. USD/JPY has yet to break below the neckline of the formation before confirming the potential downtrend, which could last by as much as a hundred pips. Stochastic is still moving lower so there seems to be enough selling pressure to trigger a breakdown but, if a bounce takes place, price could climb back up to its previous highs around the 104.30 area or beyond.

NZD/USD: 4-hour

NZD/USD 4-hour Forex Chart

NZD/USD 4-hour Forex Chart

Are you a Kiwi bear? Then you might wanna check out this trend setup on NZD/USD’s 4-hour forex chart. Price is currently testing the falling trend line connecting the recent highs while stochastic is indicating overbought conditions. This suggests that another selloff might take place, with the pair poised to test its previous lows or perhaps make new ones. Take note that the 100 SMA is moving below the 200 SMA, which means that the downtrend is pretty strong for now, with the shorter-term SMA likely to keep any rallies in check.

AUD/JPY: 4-hour

AUD/JPY 4-hour Forex Chart

AUD/JPY 4-hour Forex Chart

After that strong break past the 96.00 handle, AUD/JPY has to make a retest, right? If you’re bearish on this pair, you could catch the potential selloff from its current levels as a bearish divergence can be seen. If you’re bullish on this one, you could wait for a pullback to the 96.00 major psychological mark and for stochastic to reach the oversold area. Using the Fib tool on the breakout move shows that the 38.2% retracement level lines up with the broken resistance zone, adding to its strength as a possible support level. A bounce from this region could take the pair back to its recent highs.

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.