As my homegirl Happy Pip pointed out yesterday, NZD/USD has formed a neat double bottom pattern on its daily forex chart, hinting that a long-term reversal from the downtrend could take place. Heck, it looks like the pair already made a convincing upside break from the neckline resistance at the .7600 major psychological level, confirming the potential uptrend. Price could head up by around 400 pips, which is roughly the same height as the chart formation, but stochastic is already indicating overbought conditions. If the resistance at .7600 holds, NZD/USD could head back to its previous lows around .7200.
Doji alert! A reversal candlestick pattern has formed right an area of interest visible on AUD/JPY’s daily forex chart, suggesting that the pullback move is already over. Price is stalling at the 38.2% Fibonacci retracement level, which lines up with a broken support area and is close to the 95.00 major psychological resistance. At the same time, stochastic is nearing the overbought area, which means that Aussie bulls are losing steam. If the resistance holds, AUD/JPY could head back to its previous lows at the 90.00 major psychological support. Just make sure you set your stops wide enough if you’re thinking of shorting!
Bounce or break? USD/CAD is approaching a strong support area at the 1.2400 major psychological level, which is at the bottom of its range on the 4-hour chart. A bounce off this floor could mean a move back up to the top of the range at the 1.2800 major psychological level. Stochastic is already moving up from the oversold area, which means that buyers are starting to take control of price action. However, if sellers refuse to give way, USD/CAD might still have a shot at breaking below support and going for more losses. Better review our lesson on How to Trade Breakouts if you’re waiting for one!
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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.