Careful, dollar bulls! USD/JPY just broke below the bottom of its rising wedge pattern on the 1-hour forex chart, which suggests that the pair is in for further declines. Price seems to be in the middle of a pullback, though, as stochastic is moving up from the oversold area. In that case, the pair could test the broken wedge support around the 124.50 minor psychological level and 200 SMA, which might keep gains in check. If that area holds as resistance, USD/JPY could resume its drop to the recent lows around 123.80 or much lower. Note that the wedge is around 250 pips in height so the resulting selloff could last by the same number of pips. However, the 100 SMA is still above the 200 SMA for now, indicating that a climb is still possible.
Think the trend is your friend? Then you should have a look at this ascending channel setup on USD/CHF’s 4-hour forex time frame. The pair is currently testing the bottom of the range round the .9700 major psychological mark and seems to be ready for a strong bounce back to the top. The bottom of the channel lines up with the 100 SMA, adding to its strength as a potential support zone. The short-term SMA is above the long-term 200 SMA, hinting that the ongoing uptrend is likely to carry on. Aside from that, a bullish divergence has formed, with stochastic making lower lows and price showing higher lows. Make sure you set your stop below the channel support if you’re gonna go long!
Last but not least is this potential pullback play on the daily forex chart of USD/CAD. The pair recently made a strong rally past the resistance at the 1.2800 major psychological level then zoomed up to the 1.3200 area. From there, price showed signs of retreating, which means it’s time to take a look at the potential Fib retracement levels. In particular, the 38.2% Fibonacci level lines up with the broken resistance at 1.2800 and might hold as support from now on. Stochastic is still moving down from the overbought zone so sellers are still in control and a larger pullback might also be possible. The line in the sand for any corrections is the 61.8% Fib, which coincides with the 100 SMA, so a break below that area could mean that a reversal is taking place.
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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.