As I always say, the most conservative way to play a descending channel is to look for resistance and selling opportunities near the top of the channel. Unfortunately, a conservative setup is not yet available on EUR/JPY’s 1-hour forex chart since price has just recently reached the bottom of the channel. Stochastic is already pointing up and moving away from the oversold region, though, so forex traders who are bullish on the pair may be in control already. And price action seems to confirm bullish control. Going long here would be counter-trend trade, however, given that the moving averages are still in downtrend mode, so be extra cautious should you find a trade.
That there 120-pip trading range or rectangle on USD/JPY’s 1-hour forex chart was just recently confirmed when price bounced off support around the 122.30 handle. Presently, bulls are still gunning for the resistance area at the 123.50 minor psychological level, but stochastic is already indicating overbought conditions. There are still no signs that price has found resistance, however, so don’t be too eager to go short. And as always, the most conservative way to play is to wait for price to test the resistance area. In any case, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
Okay, this isn’t exactly a forex chart pattern setup since we’re actually more interested on the downside channel breakout. Anyhow, price finally broke out of a well-respected channel with sufficient and convincing momentum before pulling back when it failed to smash support around the 184.50 minor psychological level. Using our Fibonacci tool, the most conservative pullback area seems to be the 38.2% retracement level since lines up with a price area of significant market interest around the 186.00 major psychological level. Also, said price area is close to the breakout point. Stochastic is already indicating overbought conditions, however, so there’s a chance that price would continue moving down without pulling back to the price area that we’re watching.
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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