These chart patterns just keep on coming, don’t they? Anyhow, I’ve got a potential channel on EUR/JPY and a triangle on EUR/CHF that y’all may like. I guess that also means that I’m serving up a euro special today.
As y’all can see, EUR/JPY has been trading with an upside tilt lately, so much so that a potential ascending channel is beginning to form.
I say “potential” because the chart pattern ain’t validated yet until the pair moves higher higher and completes the pattern by testing the would-be channel’s resistance area. As such, today’s play is extra risky, so only the gangsta traders out there should even bother. Know what I’m sayin?
Anyhow, the pair just bounced off the would-be channel’s support area at the 129.50 minor psychological level, so y’all better think quick if y’all wanna join in with a long or not.
And if you do jump in, just make sure to observe how the pair reacts to 130.60 since bears seem to have a lot of interest in that area. So if them bears plan to start bustin’ caps, then 130.60 is likely where it’s at.
Also note that since the channel hasn’t been validated yet, the risks are relatively high that the pair may move to the downside instead. And our technical indicators are currently painting a good probability for that scenario since them moving averages just recently crossed-over into downtrend mode while stochastic is signaling overbought conditions and all that.
And if the pair does move lower, then clearing 128.60 likely means that them bears are gunning for 126.60 next.
Is EUR/CHF gonna be moving to the downside soon? Well, there’s certainly a good chance of that happening sooner or later since a descending triangle has formed on EUR/CHF’s 1-hour chart.
As it says on the tin, a descending triangle is a bearish chart pattern, so our main directional bias is to the downside. And basically, we’re waiting for the pair to smash past 1.1270 on strong bearish momentum, with the likely initial destination at or just above 1.1060, although the pair could still move lower.
If you’re gangsta enough, you can even try looking for opportunities to go short inside the triangle, especially since stochastic is already indicating overbought conditions and all that.
However, since the the descending triangle formed after an uptrend, there’s still a risk that the pair may break to the upside instead. And y’all may wanna prepare for such a scenario as well. The pair needs to clear both 1.1460 and 1.1530 before an upside breakout is confirmed, though.
In any case, just make sure to practice proper risk management, a’ight?