First up on today’s lineup is that there descending channel on CAD/JPY’s 1-hour chart. And as I always say, one of the more conservative ways to play a descending channel is to look for opportunities to go short near the channel’s resistance area. Well, it just so happens that price is milling about near the channel’s resistance area. Not only that, stochastic is already making its way lower after visiting the overbought area while the moving averages are in downtrend mode. Moreover, the channel’s resistance area lines up with the 78.00 major psychological level (dashed horizontal line). Overall, technical arguments seem to favor further downside moves. However, there’s always a chance that the pair may move higher instead, so make sure to practice proper risk management, okay?
The small symmetrical triangle that we identified on USD/JPY’s chart back on Friday got validated when the pair gapped higher over the weekend. However, stochastic is already indicating overbought conditions. In addition, the pair is also revisiting the broken support area of that there ascending channel. And it just so happens that the channel’s broken support area sits right smack on the 104.50 minor psychological level (dashed horizontal line). As such, we are presented with two major scenarios: (1) the pair makes it way back into the channel, or (2) the channel’s broken support at 104.50 acts as resistance and sends the pair lower.
Finally, we’ve got a rather large symmetrical triangle forming up on EUR/JPY’s 1-hour time frame. A symmetrical triangle means that bulls and bears are duking it out, but neither side has a clear advantage. An upside breakout is therefore just as likely as a downside breakout. In any case, a breakout could potentially last for a whopping 400 pips, based on the height of the forex chart pattern.
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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.