Where to now, AUD/USD? The pair has been consolidating inside a symmetrical triangle pattern on its 1-hour forex chart since the start of the month and might be due for a breakout anytime soon. But which direction will it take? The 100 SMA is currently below the 200 SMA, hinting that the path of least resistance is to the downside. However, stochastic is moving out of the oversold region, which suggests that buyers could push for an upside break. Either way, the resulting move could last by around 250 pips or the same height as the triangle formation. Better wait for a candle to close below the previous lows around .7250 if you’re shorting or a break past the previous highs around the .7300 mark if you’re looking to go long.
Here’s another symmetrical triangle pattern for y’all! EUR/JPY is testing the top of the triangle visible on its 4-hour forex chart and might be headed back towards support. Stochastic is already nearing the overbought area, which suggests that euro bulls might need to take a break soon. If so, a move back to the bottom of the triangle around the 135.00 major psychological level and moving averages might be in order. However, the 100 SMA just crossed above the longer-term 200 SMA, which means that further gains are possible. If buyers are still strong enough to take EUR/JPY past the triangle resistance, the pair could climb by an additional 700 pips or the same height as the chart pattern. Similarly, a downside break could lead to a 700-pip drop.
Last but not least is this huge ascending triangle pattern on EUR/USD’s daily forex chart. Price just got rejected on its test of the triangle resistance around the 1.1475 level and might be on its way back to the bottom since stochastic is heading south. In this case, a test of the support at the 1.1200 major psychological level near the 100 SMA might be in order. The moving averages might continue to keep gains in check for now, as an upward crossover has taken place, indicating that the climb could carry on. If this week’s catalysts allow euro bulls to charge, an upside break past the triangle resistance could spur a 900-pip uptrend, which is roughly the same height as the chart formation. But if euro bears take control of long-term price action, a break below the 1.1200 support could lead to a 900-pip downtrend.
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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.