Watch out, euro bulls! A reversal seems to be brewing on EUR/JPY’s 1-hour forex chart, as the pair formed a double top pattern after failing to break past the 137.00 major psychological barrier. Price is currently gearing up to test the neckline around the 135.00 handle while the moving averages look ready to make a downward crossover. Once those conditions are met, EUR/JPY could be in for a 200-pip tumble, which is roughly the same size as the chart formation. Stochastic is already indicating oversold conditions, though, so sellers might be feeling pretty exhausted. If buyers are able to take over, the pair could bounce off the neckline and make another move towards the previous highs.
Consolidation is still the name of the game for CAD/JPY! The pair is still stuck inside the ascending triangle formation, which is visible on the 1-hour forex time frame. Price is making its way towards the triangle support just above the 90.50 minor psychological level while stochastic is already in the oversold area, which suggests that a bounce back to the resistance at 92.00 is possible. But with the consolidation getting tighter and tighter, a breakout is bound to take place soon. Whichever direction the pair takes, the resulting upside or downside break could be followed by a 500-pip move, which is around the same size as the triangle pattern. Better review our lesson on How to Trade Breakouts if you’re hoping to catch one!
Last but not least is this new trend forming on Cable’s short-term forex chart. The pair has formed higher lows and higher highs, creating an ascending channel on its 1-hour time frame. Price just got rejected on its test of resistance and is making its way back towards the bottom of the range near the 1.5500 major psychological mark and the moving averages. The short-term 100 SMA is still above the longer-term 200 SMA, confirming that the uptrend is likely to carry on. Aside from that, stochastic is already in the oversold region and is starting to turn higher, which means that pound bulls are likely to charge anytime soon. The pair seems to be finding support at the mid-channel area of interest already, also indicating that the climb might resume at this point.
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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.