It looks like the stars are lining up for a bearish euro position! After breaking below a short-term rising trend line recently, EUR/USD has made a quick pullback then formed what appears to be a complex head and shoulders pattern. It may look a little sketchy at first but you can see that price has already broken down the formation’s neckline. Note that the pattern is roughly 250 pips in height, which suggests that the resulting selloff might be of the same size.
Here’s another potential trend reversal on USD/CHF’s 4-hour time frame. The pair has also drawn a complex inverse head and shoulders pattern, indicating a possible uptrend. Right now though, price is still stalling around the diagonal neckline while stochastic is edging towards the oversold region. An upside break could lead to a 150-pip rally, which is approximately the same size as the chart pattern.
If you prefer looking at trends, then you definitely gotta check this one out! USD/JPY is forming a rising channel on its 4-hour chart. It looks ready to test the channel resistance right around the 103.50 minor psychological level while stochastic is indicating overbought conditions. A selloff could last until the mid-channel area of interest near 102.50 or until the bottom of the channel around 101.75. Make sure you wait for confirmation before hopping in!
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.