Time for a reversal? On its daily time frame, AUD/JPY has formed an inverse head and shoulders pattern, which is a classic reversal signal. The pair has yet to break above the neckline located near the 95.00 major psychological level before an uptrend is confirmed. Take note though that stochastic is in the overbought region, which suggests that Aussie bulls need to gather more energy before pushing for an upside break.
Check out EUR/JPY chillin’ like ice cream fillin’ right on the middle of the rising channel on its 4-hour time frame! The pair could still be on its way to test its previous highs around 136.00 or the top of the channel around 136.50. However, stochastic is nearly in the overbought zone, which means that euro bears could pounce soon and go for another test of the bottom of the channel.
Last but not least is a shorter-term break and retest scenario for GBP/JPY. The pair has pulled up to the 158.00 area after selling off in the past weeks, but it seems that the downtrend could resume soon. It is currently finding resistance at the 61.8% Fibonacci retracement level, which is in line with a former support area. Make sure you wait for stochastic to reach the overbought area before jumping in short though!
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.