Where now, EUR/USD? The pair has been making higher lows and lower highs, creating a symmetrical triangle forex pattern on its 1-hour time frame. Price just bounced off the triangle resistance and might make its way to the bottom, as stochastic is also heading south and indicating that sellers are in control for now. If the euro bears are strong enough, they could push for a break below triangle support and spark a 200-pip selloff, which is the same height as the triangle pattern. Don’t forget to review our School of Pipsology lesson on How to Trade Triangle Formations if you plan on taking this one!
Pound bulls, watch out! GBP/JPY seems to be getting exhausted from its climb, as the pair formed a reversal chart pattern on its 1-hour forex time frame. A double top formation can be seen, with the pair gearing up to test the neckline support around the 181.50-182.00 psychological levels. Stochastic is climbing though, suggesting that buying pressure is building up and that another bounce might take place. If bears take control, GBP/JPY could break below the neckline and tumble by as much as 300 pips, which is the same height as the reversal formation.
Confluence, baby! NZD/USD seems to be in the middle of a correction on its short-term forex chart and price might pull back to the support levels lining up near the .7800 major psychological level. As you can see from the chart above, this coincides with the ascending trend line, 61.8% Fibonacci retracement level, and the 200 SMA. The shorter-term 100 SMA just crossed above the 200 SMA anyway, indicating that an uptrend is starting. Stochastic is already indicating oversold conditions, which means that Kiwi bulls are ready to charge and push NZD/USD back up to its previous highs around .7900.
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.