Daily Chart Art – May 20, 2016

GBP/JPY: 4-hour

GBP/JPY 4-Hour Forex Chart

GBP/JPY 4-Hour Forex Chart

GBP/JPY is consolidating just above the 160.50 handle, which lines up with a falling channel resistance that’s been holding since mid-February. What makes this setup more interesting is that stochastic is also in the overbought territory. Think the pound is about to lose pips on the yen? A short trade at current levels could give you a good reward-to-risk ratio especially if you aim for the channel’s support area. Of course, you could also wait for a break above the channel if you’re one of them pound bulls and you’d rather trade an upside breakout.

EUR/USD: Daily

EUR/USD Daily Forex Chart

EUR/USD Daily Forex Chart

Can’t get enough of trend trades? Here’s another one for ya! EUR/USD looks like it’s headed for the 1.1150 levels, which is near a rising trend line as well as the 100 and 200 SMAs on the daily chart. Not only that, but stochastic is also chillin’ like a villain on the oversold zone. A stop loss below the trend line could make for a good trade if you think that the euro is about to see a bounce against the Greenback. Remember to keep your stops wide though, especially if you’re trading position trade patterns like this one.

EUR/GBP: Daily

EUR/GBP Daily Forex Chart

EUR/GBP Daily Forex Chart

Breakout alert! EUR/GBP has just broken what looks like a head and shoulders pattern on the daily time frame. If you’ve read the School of Pipsology, then you’ll know that the breakout is usually as wide as the distance from the “head” to the “neckline,” which is around 350 pips in this case. Be careful in shorting this one though, as the 200 SMA is just around the corner. What’s more, but stochastic is also about to reach the oversold levels. The bears could short either at market or at a retest of the broken neckline and aim for the previous resistance below the .7500 levels. If you’re one of them euro bulls though, then you can also pull up your Fib lines and wait for bullish momentum around those levels.

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.