Take a good look at that ascending triangle that has formed on AUD/JPY’s 4-hour chart! The way I see it, there are two ways to trade this pattern. First, you can wait for price to convincingly close above the major resistance at the 97.00 area and go long. Second, you can bank on resistance to hold, go short on the pair, and aim for the bottom of the pattern.
Speaking of pattern breaks, it looks like a medium-term descending trend line has just been broken on EUR/USD’s 4-hour chart. As you can see, EUR/USD just recently managed to close above both the 1.3400 level and a key falling trend line. If you’re bullish on the pair, now could be a good time to consider going long and aim for the next major resistance level at 1.3500.
Price action has stalled? Check. Doji candlesticks have formed? Check. Stochastic shows overbought conditions? Check. Given the appearance of all these bearish reversal signals, it seems that USD/CAD is ready to pullback. In the event that price does retrace, watch 1.0070 carefully. The level could serve as support as it lines up nicely with both the rising trend line and the 50% Fibonacci retracement level.
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.