Check out this neat symmetrical triangle forming on EUR/USD’s daily forex chart! The pair just bounced off the middle of the pattern around the 100 SMA dynamic support and seems to have its sights set on the triangle resistance near the 200 SMA. Stochastic is suggesting that the pair could keep climbing since the oscillator is moving up. Once it reaches the overbought zone, euro bears might return to action and force the pair to turn from the 1.1300 major psychological resistance. However, if euro bulls keep charging, an upside break from the triangle pattern could be possible, taking the pair up by an additional 1,000 pips or the same size as the chart formation.
Is Cable ready for a breakout? Price is currently testing the top of the rising wedge on its 4-hour forex chart, still deciding whether to head further north or to move back south. The 100 SMA is above the longer-term 200 SMA, indicating that the path of least resistance is to the upside, while stochastic is also climbing and showing that buyers are still in control. A break above the 1.5700 major psychological resistance could spur a 350-pip rally, which is the same height as the wedge pattern. On the other hand, a return in selling pressure could lead to a drop back towards the support at the 1.5575-1.5600 area near the moving averages.
It looks like a reversal is brewing for USD/JPY! After its steady climb, the pair formed a complex head and shoulders pattern on its 1-hour forex time frame, hinting that buyers are already tired and that sellers are about to take control. Price already broke below the neckline support while the 100 SMA crossed below the 200 SMA, confirming that a downtrend is underway. The chart pattern is approximately 120 pips tall so the resulting selloff could last by the same number of pips. However, stochastic is already indicating oversold conditions, which means that a quick pullback to the broken neckline near the 123.00 handle could still take 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.