Watch out, Aussie bears! AUD/JPY has just formed an inverse head and shoulders pattern on its 1-hour forex chart, indicating that a short-term reversal from the previous downtrend might take place. Price has yet to break past the neckline at the 92.00 major psychological resistance before confirming the potential uptrend, but stochastic seems to be suggesting that bulls have enough energy to push the pair higher. In that case, AUD/JPY could climb by around 300 pips, which is the same height as the chart pattern.
Here’s another potential reversal pattern, this time on GBP/JPY’s 4-hour forex chart. The pair has failed in its last three attempts to break below the 176.00 major psychological support, creating a triple bottom chart formation. Just like the double bottom, this is considered a reversal signal and an upside break from the neckline around the 180.00 major psychological mark could confirm that an uptrend will take place. If 180.00 continues to hold as strong resistance though, price could make another bottom and be stuck in a range.
Who’s up for a quick countertrend trade? As you can see on its 1-hour forex time frame, EUR/JPY has been moving inside a rising trend channel and looks ready to test the top. This lines up with the 136.00 major psychological mark, which could hold as resistance and push price back to the bottom of the channel around 133.50. Stochastic is starting to move down from the overbought area, indicating that euro bears are ready to take control of price action. Better set those stops above the channel resistance if you’re planning on shorting!
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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.