Signs of a retracement, finally! EUR/JPY is pulling up from its recent selloff, after price gapped down over the weekend and spiked to a low of 130.15. Using the Fib tool on the latest swing high and low on the 1-hour forex chart shows that the 61.8% Fibonacci retracement level is close to the broken support at the 135.00 major psychological handle. However, the 50% Fib already seems to be holding as resistance for now and may be enough to push price back down to its recent lows. Stochastic is moving up though, which means that a higher pullback is still possible.
Here’s another potential pullback play on a yen pair. AUD/JPY is catching its breath after its dive, as price has retreated from a low of 92.17 to the 94.00 major psychological mark. This is close to the 38.2% Fibonacci retracement level on the 1-hour forex time frame and may already hold as resistance, especially since stochastic is already indicating a pickup in selling pressure. If buyers stay in control, a larger correction to the area of interest near the 61.8% Fib level might take place before the downtrend resumes.
If you’d rather trade ranges instead, you might like this USD/JPY forex setup much better. The pair just bounced off support around 117.25 and is heading for the top of the range near the 118.75 level. Stochastic has been indicating overbought conditions for quite some time, which means that buyers are exhausted and that sellers could take over. In this case, USD/JPY might make its way back to the bottom of the range and possibly make another bounce. Make sure you set your stops right if you’re thinking of shorting at the range resistance!
Slow Stochastic: 14,3,3 100 SMA: Blue line 200 SMA: Red line 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.