Watch out for a potential reversal, fellas! EUR/AUD is creating a head and shoulders pattern on its 4-hour forex time frame, indicating that the recent climb is already over. The pair has yet to break below the neckline of the formation around the 1.4200-1.4250 levels before confirming the potential selloff. If that happens, EUR/AUD could fall by as much as 400 pips, which is the same height as the chart pattern. However, stochastic has just reached the oversold zone, suggesting that euro bears are feeling exhausted. Just make sure you review our lesson on How to Trade Chart Patterns if you’re thinking of shorting!
Ho humm, EUR/GBP is still stuck in a tight range… But these short-term bounces might still be worth watching! The pair has found support at the .7800 major psychological level and resistance around .7860, creating a rectangle forex chart pattern that has been holding since the beginning of November. Right now though, EUR/GBP is stalling in the middle of the range, still deciding whether to make a test of resistance or a move towards support. Stochastic is hinting at the southbound direction, as the oscillator is making its way down from the overbought area. Better set tight stops if you’re playing the range or think about taking breakout setups as well.
Last but not least, here’s a descending triangle chart pattern forming on EUR/CAD’s 1-hour forex time frame. Price is finding support at the bottom of the formation near the 1.4075 level for now and may be headed for the top around 1.4200-1.4250. Stochastic is still climbing, which means that there may be a bit of bullish momentum left. Once the oscillator turns and moves down from the overbought zone, euro bears could take control of price action and lead to another test of support. Do watch out for any breakouts in either direction, as the resulting rally or selloff might last by as much as 400 pips!
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.