Am I seeing double? A double bottom formation, that is! USD/CHF made a couple of failed attempts to break below the .9150 minor psychological support level last month, creating a double bottom pattern with the neckline near .9400. Right now, the pair is still gathering enough energy to break above that resistance. Since the pattern is roughly 250 pips in height, a strong upside breakout could mean that USD/CHF could head north by 250 pips as well.
Here’s another reversal pattern that seems to be playing out! A double top formation can be seen on GBP/AUD’s 4-hour time frame, and it appears that the pair has already broken below the neckline around 1.7230. A bullish divergence has formed though, suggesting that the pair might pull back before heading any lower. Using the handy dandy Fib tool reveals that the 38.2% retracement level coincides with the pattern’s neckline, which suggests that it could act as resistance.
After AUD/USD’s double top breakdown in August led to a massive selloff, the pair looks ready to make a huge correction and possibly test the chart pattern’s neckline. This former support area is in line with the 61.8% Fibonacci retracement level, which means that it could act as resistance later on. Take note though that a doji has already formed near the 50% Fib and that stochastic is deeply overbought, so Aussie bears could attack pretty soon!
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.