Daily Forex Chart Art – Oct. 20, 2015

EUR/GBP: 4-hour

EUR/GBP 1-hour Forex Chart

EUR/GBP 4-hour Forex Chart

Breakout alert! EUR/GBP was stuck inside a rising wedge pattern for nearly a couple of months before it finally picked a direction and moved south. The pair seems to have made a legit downside break of the wedge support and the moving averages, indicating that further losses are likely. Note that the chart pattern is almost 500 pips tall so the resulting downtrend could last by that much, possibly taking EUR/GBP below the .7000 handle. The 100 SMA is still above the longer-term 200 SMA for now while stochastic is climbing out of the oversold zone, which means that buyers might not give up too easily and could still regain control of price action. If so, price could move back inside the wedge pattern and make another test of the resistance near the .7500 mark.

CAD/JPY: 1-hour

CAD/JPY 1-hour Forex Chart

CAD/JPY 1-hour Forex Chart

Looking for a reversal? Feast your eyes on this head and shoulders pattern that just formed on CAD/JPY’s 1-hour forex chart! This shows that the pair is tired from its climb and might be ready to start its descent soon. Price is already testing the neckline support near the 91.50 minor psychological level, with a breakdown likely to confirm that a downtrend is underway. The 100 SMA has crossed below the 200 SMA, signaling that sellers are starting to flex their muscles, but stochastic is already indicating oversold conditions. A quick bounce off the neckline support might still take place before a breakdown occurs but if Loonie bulls step up their game, the pair might be able to rally back to the previous highs around 92.50 to 93.00.

GBP/CAD: 4-hour

GBP/CAD 4-hour Forex Chart

GBP/CAD 4-hour Forex Chart

For the fans of break-and-retest setups out there, y’all didn’t think I’d miss this one on GBP/CAD’s 4-hour forex chart, did ya? After breaking below the head and shoulders neckline around 2.0150, the pair dipped to a low of 1.9735 before bouncing back up. Using the Fib tool on the latest swing high and low shows that the broken neckline support coincides with the 50% Fibonacci retracement level, which might hold as resistance. This is also close to the dynamic inflection point at the 200 SMA. Stochastic just reached the overbought zone so the bullish momentum might fade soon, allowing sellers to take over and push the pair back to the previous lows or much lower. A higher pullback to the 61.8% Fib could be possible, but a break above that level might mean that an uptrend is brewing.

Forex 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.