Higher lows and resistance at the 1.1350 minor psychological mark… Why, that’s an ascending triangle right there! This type of chart pattern seems to be forming on EUR/USD’s 1-hour forex chart, with price just testing the top of the triangle. If it continues to hold as resistance, the pair could make its way back to the triangle support which is now at the 1.1200 to 1.1250 area. Stochastic is pointing up, which means that euro bulls are on top of their game and might be strong enough to push for an upside break of resistance. If that happens, the pair could be in for close to 500 pips in gains, which is roughly the same height as the triangle formation.
If you’re a huge fan of Fibonacci like I am, then you’re probably digging this neat setup on USD/JPY’s 4-hour forex chart. The pair had a pretty stellar rally in the past weeks only to make a sudden retreat over the last couple of days. The selloff could be over by now, as price seems to be finding support at the 38.2% Fibonacci retracement level and the 100 SMA. At the same time, stochastic is already indicating oversold conditions, which means that sellers are exhausted. If support holds, USD/JPY could climb back up to the previous highs at 125.86 and beyond. But if a deeper retracement is in play, better watch out for reversal candlesticks around the 61.8% Fib or 200 SMA.
Here’s another potential retracement play, this time on Cable’s 1-hour forex chart. The pair recently broke past resistance around the 1.5350 minor psychological level and zoomed up to the 1.5500 mark. Price seems to be having trouble sustaining its climb and might need to retreat to the Fib levels before heading further north. Stochastic is moving down from the overbought region anyway, indicating that pound bears are taking control. GBP/USD could pull back to the broken resistance area, which is near the 50% Fibonacci retracement level and 100 SMA. Better review our lesson on Combining Fibs with Support and Resistance if you’re looking to trade this 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.