Watch out, Kiwi bears! A complex double bottom formation appears to have formed on NZD/USD’s 4-hour forex chart, suggesting that the recent downtrend might soon reverse. The pair still has a few pips to go before testing the neckline resistance near the .6450 minor psychological mark and stochastic seems to be suggesting that there’s enough bullish momentum left for more gains. If the .6450 area and the 200 SMA still hold as resistance, price could make its way back down to the previous lows around the .6250 mark. On the other hand, a break above the neckline could spur at least 200 pips in gains, which is the same height as the chart pattern. Take note that the 100 SMA is still below the 200 SMA so the path of least resistance is to the downside.
Missed the triangle breakdown on CAD/JPY? How about the pullback? Well, if you didn’t catch those opportunities to short the pair, you might still have a chance to hop in this ongoing selloff which is just gaining momentum. The pair made a correction to the broken triangle support near the 61.8% Fib and 200 SMA before showing signs of resuming the drop, which might last by 350 pips or the same height as the triangle pattern. Either that or the pair can head back towards the previous lows at the 89.00 major psychological support, which is still a good hundred pips away from its current levels. Be careful, though, since stochastic is already in the oversold zone and might turn higher soon, possibly putting Loonie bulls back in the game.
If you’re looking for a fresh pullback setup, then you might like this one on USD/JPY’s 1-hour forex time frame. After breaking past the symmetrical triangle resistance and zooming up to a high of 121.23, the pair retreated to the 38.2% Fibonacci retracement level and moving averages. Stochastic is already indicating oversold conditions, which means that a bounce might take place sooner or later, taking USD/JPY up to the previous highs. Stronger buying pressure could push the pair up by an additional 300 pips or the same height as the triangle formation. However, if price is still in correction mode, a larger pullback to the 61.8% Fib or 120.00 major psychological level might be in the cards. Better wait for stochastic to start heading north before going long!
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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.