After making a short drop earlier this month, the USDJPY has been steadily recovering while, at the same time, respecting a rising trend line. With stochastics not yet in overbought territory, we could see the pair continue its upward trek before finding resistance at 90.50. However, given how tight trading has been lately, we could be in line for a breakout. If resistance at 90.50 fails to hold, we could see the pair breakout to test highs at 91.00 or 92.00. On the other hand, if the pair makes a break to the south, we could see the pair fall to the recent swing low at 88.57.
Now, let’s move on to cable. Similarly, movement has been pretty tight after a steep drop that we saw a couple weeks ago. The pair has been ranging, forming a bearish flag / symmetrical triangle formation on the 4-hour, signaling a possible breakout. If we see the pair shoot up, we could see it test 1.5870 price handle, which served as a previous support level before. However, if sellers come back in force, we could see the pair make a dash for the yearly low at 1.5535.
After the AUDUSD’s climb last week, it looks like the pair is about to encounter some serious seller resistance. Look at how 0.8950 has provided significant support for the pair on the daily before being broken. Remember, when price busts through a major support level, that price level usually becomes resistance. In addition, 0.8950 ines up nicely with the 50% Fibonacci retracement level. With stochastics about to head into overbought territory, the pair could swing lower once the 0.8950 price level is hit.