Missed the breakout on EUR/USD’s descending triangle pattern? Don’t worry! You might still have a chance to catch the pullback to the broken resistance area. Using the Fib tool on the latest swing high and low on the 4-hour forex time frame shows that the 38.2% to 50% levels line up with the descending triangle resistance, which might hold as support from now on. Stochastic is moving down but is already approaching the oversold zone, which means that the correction might be over pretty soon and that the rally could resume afterwards. The 100 SMA looks ready to cross above the 200 SMA, confirming that a rally is underway. Take note that the triangle pattern is approximately 600 pips tall so the uptrend might last by the same number of pips.
If you’re bearish on the euro, then you might like this EUR/JPY forex setup much better! A reversal from the previous uptrend seems to be looming since the pair formed a double top pattern on its 1-hour time frame. In fact, the pair seems to have already broken below the neckline of the formation around the 138.00 major psychological level, suggesting that the downtrend is already starting. If so, price could fall by an additional 100 pips, which is around the same size as the double top formation. Be careful when shorting, though, as stochastic has just reached the oversold area while the 100 SMA is moving safely above the longer-term 200 SMA, hinting that another bounce might be in order. If euro bulls take over, EUR/JPY might even form another top near the 139.00 handle.
Looks like CAD/JPY might be stuck in this range! The pair has been moving sideways on its 1-hour forex chart, finding support at the 94.50 minor psychological level and resistance at the 96.00 major psychological mark. Price just came off a test of resistance and is now headed towards the bottom of the range, which might continue to hold as support. After all, the 100 SMA is still above the 200 SMA so the path of least resistance is to the upside while stochastic is already indicating oversold conditions, which means that sellers are getting exhausted. A bounce from the support could lead to another climb back to the top or perhaps an upside break if buyers are strong enough. Better wait for reversal candlesticks to form around 94.50 if you’re looking to go long.
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.