If you’ve been on USD/JPY’s northbound train for quite some time now, you might want to consider hopping off! The pair just broke below the rising trend line on its 1-hour forex chart, indicating that a reversal is bound to take place. The pair dipped below the 118.00 mark then pulled up for a retest of the 119.00 handle, which is right around the broken trend line and the 50% Fibonacci retracement level. Stochastic is pointing down, hinting that the pair could be southbound for now and on its way to test the previous lows or perhaps make new ones.
Think you’re too late to catch the USD/CAD breakout? Don’t fret just yet! You could still have a chance to join the climb on a pullback, as the pair appears to be retreating back to the 1.1500 major psychological level. This lines up with the broken resistance area and the 50% Fibonacci retracement level on the 1-hour forex chart. Stochastic is still heading lower, which means that sellers are in control of price action and might push the price back to the next support zone. A bounce off 1.1500 could lead to a move back to the previous highs and beyond!
Is that a shallow bearish divergence I’m seeing? GBP/JPY recently made lower highs while stochastic drew higher highs, indicating a potential continuation of the ongoing selloff. Price has just pulled up to the 50% Fibonacci retracement level, which lines up with an area of interest at the 187.50 minor psychological level and might hold as resistance. If so, the pair could resume its drop to the previous lows near the 185.00 major psychological level or head further south. Better make sure this forex setup meets the 9 Rules for Trading Divergences if you’re thinking of shorting.
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.