Breakdown alert! NZD/JPY could be in for more losses, as the pair broke below the support of its descending triangle pattern visible on the 4-hour forex time frame. Stochastic is on middle ground but is pointing down, confirming that Kiwi is headed south, while the 100 SMA is still below the longer-term 200 SMA. Take note that the chart formation is approximately 200 pips in height so the resulting selloff could be of the same size, possibly taking NZD/JPY down to the 79.15 level. If you’re not ready to hop in at market, you could wait for a pullback to the broken triangle support at the 81.15 mark to short at a better price.
Remember that USD/CHF symmetrical triangle pattern I showed y’all a few days back? Well, the pair made it all the way back down to the triangle support around the .9500 major psychological level after getting rejected at the resistance. Price is currently finding support at the moving averages as well while stochastic is nearing the oversold area, suggesting that a bounce might be in order. However, the 100 SMA is still below the 200 SMA, which means that the path of least resistance is to the downside. If you’re bullish on this pair, better wait for stochastic to turn up from the oversold region and for reversal candlesticks to form before going long. If a long red candle closes below the triangle support, it might be time to short!
It looks like USD/JPY is also showing signs of a reversal on its longer-term forex charts! After breaking below that head and shoulders formation on the 1-hour time frame, the pair is now in the middle of creating a double top on its 4-hour chart. Price is still making its way towards the neckline of the formation at the 120.50 minor psychological support, with a downside break likely to set off a 500-pip drop, which is the same size as the chart pattern. For now, stochastic is indicating oversold conditions so a bounce might be possible, while the 100 SMA is treading above the 200 SMA. If the 120.50 area of interest still holds as support, a move back to the previous highs around 125.50 might be possible.
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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.