Retreat, euro bears, retreat! EUR/JPY just broke above the symmetrical triangle pattern on its 1-hour forex chart, indicating that it’s ready for more gains. The formation is approximately 500 pips tall, which means that the resulting uptrend could be of the same size, taking the pair up to the 140.00 to 141.00 levels. The 100 SMA just crossed above the 200 SMA anyway, confirming that price could keep heading north. Buyers seem pretty exhausted from the latest move, though, as stochastic is starting to move down. This means that a pullback to the broken triangle resistance around the 136.00 major psychological level might still take place before EUR/JPY resumes its climb.
Higher price highs and lower stochastic highs… Why, that’s a bearish divergence right there! EUR/NZD could be driving south soon, as the pair is also nearing the top of its rising channel on the 1-hour forex chart. If resistance around the 1.6900 major psychological mark continues to hold, price could retreat until the bottom of the range near the 1.6600 level or at least until the middle of the channel around 1.6750. Taking a countertrend setup, especially with the 100 SMA starting to cross above the 200 SMA, could be a pretty risky move so make sure you set a wide enough stop loss past the channel resistance or the 1.7000 major psychological mark.
Think the trend is your friend? Then you should take a closer look at this short-term rising trend line on USD/CAD’s 1-hour forex time frame. Price is currently testing the steep trend line, which lines up with the dynamic support at the 200 SMA, and might be due for a bounce past the previous highs around the 1.3100 mark. However, stochastic has just reached the overbought region and is starting to turn lower, suggesting that buyers aren’t quite ready to resume the climb just yet. If sellers are strong enough, they could even push for a downside break from the trend line and a potential reversal. Better watch out for a long red candle closing below the 1.3000 major psychological mark if you’re hoping to catch a drop!
Forex Chart Settings:
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.