Don’t look now but AUD/JPY is currently testing the bottom of the ascending triangle on its 4-hour forex time frame! A bounce might be in order, as stochastic is making its way out of the oversold area while the 100 SMA looks ready to make a crossover above the 200 SMA. If Aussie bulls take this as a sign to charge, price could move back to the triangle resistance at the 92.25 level or even go for an upside break. This chart pattern is around 300 pips tall so the resulting breakout could be of the same size. Of course if Aussie bears step up their game right now, a downside break from the support at the 91.00 major psychological level could be possible, too!
Here’s another potential bounce that you wouldn’t want to miss! CAD/JPY is testing the bottom of the falling wedge pattern visible on its 4-hour forex chart and might be due for a move back to the top. That bullish divergence could be enough to draw Loonie buyers back to the table, as stochastic made higher lows while price drew lower lows. Take note, however, that the 100 SMA is still safely below the 200 SMA, which means that the path of least resistance is to the downside. If you’re looking to play this chart pattern but not ready to take a countertrend trade, you could wait for a test of the wedge resistance around the 95.00 major psychological level and 100 SMA then go short.
Last but not least is this symmetrical triangle pattern on USD/CHF’s 4-hour forex chart. The pair just got rejected at the triangle resistance and might be poised for a move back towards support at the .9500 major psychological level and moving averages. The 100 SMA is currently below the 200 SMA, confirming that a selloff might take place, while stochastic is also on the way down. If you’re planning on shorting at market, just make sure you set your stop past the top of the triangle or recent highs at the .9900 major psychological level in case a quick pullback to the resistance happens. Just be ready for a potential breakout in either direction since this might last by around 700 pips.
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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.