Intraday Forex Charts Update – July 7, 2015

USD/JPY: 1-Hour

USD/JPY 1-hour Forex Chart

USD/JPY 1-hour Forex Chart

After breaking out of the massive ascending triangle that we identified last month, USD/JPY surged higher until it was repelled when it reached the 125.80 handle. After that, the pair began consolidating downwards into what now looks like a falling wedge. Since the long-term trend is up, the falling wedge is classified as a continuation forex chart pattern, which means that our directional bias is to the upside.

Of course, there’s always the possibility that price will break out in the opposite direction, and prudent forex traders should also take that into consideration. For now, there are no clear signals that the pattern is about to break, but price seems to have great difficulty pushing down and through the 122.60 handle, so perhaps support is already forming around that price area.

NZD/CHF: 1-Hour

NZD/CHF 1-hour Forex Chart

NZD/CHF 1-hour Forex Chart

If you want something with a higher probability of moving, then take a look at this descending channel setup on the 1-hour forex time frame for NZD/CHF. The basic way to play a descending channel is to look for resistance near the top of the channel. And as luck would have it, price is currently near the top of the channel. In fact, price has been sticking to the top of the channel for quite a while now that I’m beginning to suspect that forex traders bullish on the pair are gearing up for an upside breakout.

Looking at the stochastic oscillator, we can see that it’s currently pointing up, signalling that bulls may still be in control. In addition, price is currently at the 0.6300 major psychological level, a price area of significant market interest, as highlighted by the rectangle. The path of least resistance still seems to be to the downside, though, given that the moving averages are still in downtrend mode, with the 100 SMA acting as dynamic resistance.

EUR/AUD: 1-Hour

EUR/AUD 1-hour Forex Chart

EUR/AUD 1-hour Forex Chart

Price met heavy resistance after breaking out of a descending channel on EUR/AUD’s 1-hour forex chart, giving us yet another potential breakout play. This time, we’ve got either a pennant or an ascending triangle forming up. It doesn’t really matter which forex chart pattern is the correct classification since both hint that price may be moving higher soon. In any case, the moving averages have already crossed-over into uptrend mode.

Assuming price does break out and if this is indeed an ascending triangle, then we can expect price to move up by about 100 pips since that is the height of the triangle. But if this is a pennant, then we can expect a move in excess of 270 pips since that is the volatility of the pennant and its mast or pole.

As usual, make sure to practice proper risk management should you find a trade based on any of these charts.

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.