Who’s up for a potential long-term reversal? It looks like USD/JPY’s double top pattern on its 4-hour forex time frame might soon play out, as price is currently testing the necline around the 116.00 major psychological handle. At the same time, stochastic is heading south, which suggests that there’s enough selling pressure to trigger a downside break. In that case, USD/JPY could fall by as much as 500 pips, which is the same height as the chart pattern. A bounce off the neckline, on the other hand, could mean a move back towards the area of interest around 118.00-119.00.
If you’d rather trade the ranges, then this one’s for you. NZD/USD is testing the top of the range on its 4-hour forex chart, as the .7850 minor psychological resistance appears to be holding so far. Stochastic is climbing though, which means that Kiwi bulls are in control and might have enough energy to push for an upside break. If that happens, the pair could be in for longer-term rallies. Take note that the chart pattern is roughly 250 pips in height, so the resulting breakout could be of the same height. On the other hand, if Kiwi bears take over, price could head back to the bottom of the range near the .7600 major psychological support.
And for those looking for a simple retracement setup, y’all didn’t think I’d leave you out, did ya? Here’s a break-and-retest scenario on GBP/CAD’s 4-hour forex chart, as price appears to be bouncing off the 50% Fibonacci retracement level. This lines up with a broken support area around the 1.7900 major psychological level. Stochastic is moving down, confirming that pound sellers might push for a move down to the previous lows around the 1.7550 minor psychological support. A break past the Fib levels, however, could mean that pound buyers are getting the upper hand.
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.