Finally, a breakout on USD/JPY! After months of consolidating inside an ascending triangle chart pattern on its long-term forex time frames, the pair decided to pick a direction. This upside breakout suggests that price could head further north from here, possibly by around 500 pips, which is roughly the same height as the formation. If you missed the initial breakout move, you might still have a chance to hop in on a pullback since stochastic is indicating overbought conditions. A retest of the broken triangle resistance around the 121.00 major psychological level might take place before the uptrend resumes.
Here’s a simple break-and-retest play on USD/CHF’s 4-hour forex chart. The pair has been on a tear after breaking past the neckline of the double bottom pattern on the same time frame, but it looks like the rally might be over soon. Price seems to be finding resistance around the broken support level at the .9500 major psychological level, which is near the Fibonacci retracement levels on the latest swing high and low. In addition, stochastic is starting to move down from the overbought territory, suggesting that dollar bears are ready to come out and play. A selloff could take USD/CHF back down to its previous lows at .9100 or until the nearby area of interest at .9300.
Will the EUR/AUD’s downtrend stay intact? The pair has been trading below a descending trend line on its daily forex chart, with price currently testing the resistance. If it continues to hold like a boss, price could head back down to the previous lows around the 1.3700 major psychological level. Stochastic is heading lower anyway, indicating that sellers are still on top of their game for now. However, an upside break past the trend line resistance around the 1.4150 to 1.4200 area could be a sign that a reversal is about to take place and that price could climb until the next potential resistance at the 1.4500 major psychological mark.
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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.