The week’s not quite over yet, but I wanted to point this out for you weekend warriors to take into account. It looks like the market has retested a long-term declining trendline, with the stochastic indicating overbought conditions. IF this week’s candle closes as the big, red candle that it currently is, this may signal the bears to start piling in for a renewed leg back down, with targets at 1.28 and 1.21. Of course, a sustained break above the trendline could be a signal for buyers to take control, with 1.45 as a feasible target.
For those looking for shorter term setups, the EUR/JPY four hour chart might interest you. Strong moves in the euro resulted in TWO support breaks, making it a very good day for euro bears! There doesn’t look to be buyers in sight until the next major support area around 131.50, so bulls be very cautious at this time as you may be trying to catch a falling knife.
And not to leave euro bulls completely out in the cold (if there are any still left out there), but there’s an interesting broken resistance-turned-support setup on EUR/CAD. This pair has been in an uptrend for quite a while now, so the odds are that there are a lot of traders eyeing that 1.4100 area as an opportunity to buy, with a juicy upside target of at least 350 pips. Of course, if euro weakness does prevail, there doesn’t look to be support for around 400 pips, which isn’t a bad way to go either.
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.