Well, the USDJPY must be feeling very patriotic lately with all those flags on the 1-hour chart! The pair has been breaking one key support level after another for the past few days. See how it went on a tear after sliding below the 89.00 handle? Yesterday it breached the 88.00 and 87.00 levels and today it pierced past 86.00. The pair seems to have difficulty breaking below 85.00 and, with the stochastic climbing out of the oversold area, it could retrace a bit – probably until the 38.2% Fibonacci retracement level, which is right around the area of consolidation between 86.50 and 87.00. If the pair resumes its drop, the 84.00 handle looks like the next target!
Looking at the 4-hour chart of the cable, looks like a head and shoulders formation has formed. Right now however, it looks like price action is testing the falling neckline – will it hold as support? Or will we see a break down? If buyers keep price from falling, we could see a retest of recent shoulder’s high near 1.6740. On the other hand, if sellers decide to break the neckline support, the pair could dip to as low as 1.6250 before finding any substantial support.
USDCAD: 1 hour
It appears that support and resistance levels are holding well for the USDCAD as of late. Despite all the selling pressure this week, traders were unable to bring the USDCAD below last week’s lows at 1.0450. Price has bounced from that area and is now sitting at an area of interest around 1.0620. If resistance doesn’t hold, the pair could test former highs near 1.0750. On the other hand, if we see some range bound movement, sellers may bring price down to previous support levels at 1.0550 and 1.0450.