Reversal alert! AUD/JPY might be done with its recent downtrend, as the pair made an inverse head and shoulders pattern on its 1-hour forex chart. Price is still testing the neckline around the 85.50 minor psychological level but it looks like a bullish pennant has just formed right on the resistance, signaling a potential upside break. However, stochastic is still on the move down, which means that Aussie sellers are in control of price action. The 100 SMA seems ready to cross above the 200 SMA, though, indicating that a longer-term climb might take place. If that happens, AUD/JPY could rally by at least 300 pips or the same height as the chart formation.
If you’d rather just go with the flow, then you gotta see this neat trend setup on USD/CHF’s 1-hour forex time frame. The pair has been trending higher, moving inside a rising channel for the past couple of weeks. Price is currently testing the channel support near the 200 SMA and might be due for a bounce since stochastic is pointing up. The 100 SMA is above the 200 SMA anyway, which means that the uptrend is likely to carry on. In that case, a move towards the channel resistance at the .9900 major psychological mark might take place. If you think a reversal is in order, better wait for a candle to close below the previous lows or for the moving averages to show a downward crossover.
Lastly, here’s a potential range play on CAD/JPY’s 1-hour forex chart. The pair has formed higher lows and found resistance at the 92.00 major psychological level, creating an ascending triangle formation. Price seems to be on its way to test the triangle support near the 90.50 minor psychological level and the moving averages, which might be enough to keep losses in check. If stochastic soon reaches the oversold area and a bounce takes place, another test of the triangle resistance could be in the cards. An upward crossover seems to be brewing for the moving averages, possibly hinting that the pair might stay in range. If a breakout in either direction takes place, CAD/JPY could move by an additional 400 pips or the same size as the triangle pattern.
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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.