Aussie bears, unite! AUD/JPY recently formed a weird double top formation on its 1-hour forex time frame, indicating that the pair is tired from its climb and may be looking to descend soon. Lo and behold, price is just starting to break below the neckline support around the 86.00 major psychological mark, confirming that a selloff is underway. The pair could be in for at least 200 pips in losses, which is roughly the same height as the chart formation, but the technical indicators are hinting that a bounce is still possible. The 100 SMA is above the 200 SMA for now while stochastic is indicating oversold conditions and is turning higher, potentially drawing bulls back in the game. Better be on the lookout for any pullbacks if you’re planning on shorting this one.
Speaking of pullbacks, you might wanna check out this forex correction goin’ on in EUR/AUD’s 1-hour chart. The pair has been trending lower, moving below a descending trend line connecting the recent highs. Using the Fib tool on the latest swing high and low reveals that the 61.8% retracement level lines up with the trend line and a short-term area of interest near the 1.5550 minor psychological level. In addition, the 200 SMA might also hold as a dynamic resistance area since it coincides with the 50% Fib. Stochastic is already in the overbought zone, which suggests that buyers are feeling exhausted and might let sellers take over soon. If you’re looking for additional confirmation, you could keep your eyes peeled for reversal candlesticks around the 1.5500-1.5575 region.
Here’s another potential breakout play you might be interested in! NZD/USD has consolidated inside a symmetrical triangle pattern on its 1-hour forex time frame, as bulls and bears have been putting up a strong fight. It looks like the Kiwi bears are taking control of price action now since price is starting to break below the triangle support near the .6750 minor psychological mark. At the same time, the 100 SMA is below the 200 SMA, showing that the path of least resistance is to the downside. However, stochastic is climbing out of the oversold zone, suggesting that a bounce might take place or that the downside break might be a fake out.
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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.