After spending weeks consolidating inside a descending triangle forex formation, USD/JPY finally picked a direction and broke to the upside! This suggests that the pair could be in for more gains, possibly until the previous highs near the 122.00 major psychological resistance. Stochastic is already indicating overbought conditions though, which means that buyers are starting to feel exhausted and that sellers might take over. If that happens, USD/JPY could make a pullback to the broken triangle resistance near 119.50 before resuming its climb.
If you’re a fan of Fibonacci like I am, you’ll definitely dig this break-and-retest situation on AUD/USD’s 4-hour forex time frame. The pair recently broke above the .7850 minor psychological resistance level before surging close to the .8100 handle. From there, the pair retreated back to the 50% Fibonacci retracement level, which lines up with the broken resistance. This area of interest might hold as support since stochastic just reached the oversold region and may start to turn higher, bringing Aussie bulls back in the game. In that case, the pair might head back north to its previous highs.
Here’s another potential break-and-retest play, this time on USD/CAD’s 4-hour forex chart. The pair broke below its range support a few days back and dipped to the 1.2000 major psychological support before showing signs of a pullback. Using the Fib tool on the latest swing high and low shows that the 61.8% Fibonacci retracement level coincides with the broken support near the 1.2400 major psychological level. Stochastic is still moving up, which means that buyers are still in control for now. Once sellers take the upper hand, USD/CAD could make another attempt to break below 1.2000.
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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.