Careful, Kiwi bulls! NZD/JPY is currently testing the bottom of the rising wedge on its daily forex time frame and, with stochastic heading further south, it appears that a breakdown might be in the cards. If that happens, the resulting selloff might last by as much as a thousand pips, which is roughly the same height as the chart formation. Although risk sentiment appears to favor a downside break, be mindful of a potential bounce once stochastic crosses out of the oversold area.
Ahh, this USD/JPY descending triangle… It’s the gift that keeps on giving! After bouncing off the triangle support last week and finding resistance at the top of the triangle, the pair is testing the bottom at the 101.20 area once more. Stochastic is indicating oversold conditions, which means that buyers could push the pair right back up again. Until when will this tug-o-war last though? As I mentioned earlier in the week, a breakout in either direction is bound to happen sooner or later as the consolidation keeps getting tighter. Keep your eyes glued on this one, fellas!
Looking to short the Aussie? Then you should take a look at this complex head and shoulders pattern forming on AUD/USD’s 4-hour forex chart. Price appears to be testing the neckline at the .9320-.9330 area, with stochastic showing that selling pressure is still present. A strong break below the .9300 handle could confirm the potential reversal, which might lead to a 200-pip drop, around the same height as the formation. If you’re planning on shorting, make sure you watch out for potential support at the .9200-.9220 levels as well.
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.