Euro bulls, watch out! EUR/JPY is forming a reversal forex pattern in its 1-hour time frame, indicating that the previous uptrend might soon turn. A double top formation can be seen, with price still a few pips away from testing the neckline around 147.30. A break below this support zone could mean roughly 100 pips in losses for the pair, which is the same height as the chart pattern. Stochastic is moving up for now though, as buyers are still in control of price action and may take EUR/JPY up for another test of the highs near 148.20. A break past that resistance zone would invalidate the reversal signal and show that the pair is resuming its climb.
Here’s an update on the AUD/USD descending channel play I shared with y’all yesterday. As expected, price made another test of the channel resistance around the .8500 major psychological mark before heading back down. The pair is now moving close to the channel support area around the .8300 major psychological level, which might keep losses in check. A bounce from the bottom of the channel could mean another move back to the top of the channel, as stochastic is moving higher and indicating a pickup in bullish momentum. Be on the lookout for any signs that a downside break is occurring, as the current trend seems to be strong.
If you’ve missed the NZD/USD range resistance opportunity I’ve mentioned yesterday, don’t fret! You could still have a chance to play the pair’s range, as price is currently testing the bottom at the .7780 area. Stochastic is indicating oversold conditions, which means that sellers are already exhausted and that buyers might be ready to jump in. If that happens, NZD/USD could bounce from support and make its way back to the top of the range around .7915. If you’re bearish on this pair, you could wait for more confirmation in case a breakdown is about to take place and review our lesson on How to Trade Breakouts in the meantime!
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.