Euro bears, watch out! A reversal from the recent EUR/USD selloff might take place, as a double bottom pattern just formed on its 1-hour forex chart. The pair has yet to break above the formation’s neckline around the 1.0600 major psychological resistance before confirming the potential rally. Stochastic is moving down for now but is almost in the oversold area, indicating that buyers might soon take control of price action. If that happens, EUR/USD could climb by close to 200 pips, which is the same height as the chart pattern.
Who’s up for a retracement setup? Guppy looks ready for a pullback to the broken support zone around the 182.00 major psychological mark, which lines up with the 61.8% Fibonacci retracement level. Stochastic is heading north, indicating that pound bulls have enough energy to push the pair up to the Fib levels. If any of these hold as resistance, price could drop back down to its previous lows at the 179.00 major psychological support or lower. However, if GBP/JPY climbs past the 182.00 handle, it might be able to head all the way up to the next resistance at 185.00.
Brace yourselves for a potential breakout, as USD/JPY’s consolidation has been getting tighter and tighter on its 1-hour forex time frame! In fact, a symmetrical triangle pattern can be seen as price made higher lows and lower highs. Stochastic seems to be hinting at a downside break since the oscillator is moving down from the overbought area. Either way, the resulting breakout move could last by at least 150 pips, which is the same height as the chart formation. Better review our lesson on How to Trade Breakouts if you plan on taking this setup!
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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.