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AUD/JPY: 4-hour

AUD/JPY 4-hour Forex Chart
AUD/JPY 4-hour Forex Chart

Bounce or break? AUD/JPY is currently treading higher, moving inside a rising wedge pattern visible on its 4-hour forex chart. Price is testing the top of the formation, still deciding whether to make a break higher or to move back to the bottom near the SMAs. Speaking of moving averages, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, stochastic is heading north, which means that price might follow suit. If an upside break occurs, AUD/JPY could climb by an additional 600 pips, which is roughly the same height as the chart pattern. However, if the top of the wedge keeps gains in check, price could test support around the 87.50 minor psychological level.

CAD/JPY: 1-hour

CAD/JPY 4-hour Forex Chart
CAD/JPY 1-hour Forex Chart

Reversal alert! CAD/JPY just formed a double top pattern on its 1-hour forex chart, indicating that the pair is tired of climbing and might be ready to head back down. Price is still testing the neckline support around the 92.00 major psychological mark, with a downside break likely to send it lower by an additional 100 pips or the same size as the chart formation. However, stochastic is edging out of the oversold area, indicating a pickup in bullish pressure. This could allow CAD/JPY to make another bounce back to the previous highs at the 93.00 major psychological mark, especially since the short-term 100 SMA is still above the longer-term 200 SMA.

NZD/USD: 1-hour

NZD/USD 1-hour Forex Chart
NZD/USD 1-hour Forex Chart

Last but definitely not least is this trend line setup on NZD/USD’s short-term forex chart. The pair has been trending lower, with a descending trend line connecting the latest highs of price action since mid-October. After bouncing off the resistance area, price looks ready to make another test or possibly a breakout. Note that the 100 SMA just crossed above the 200 SMA, hinting that a reversal from the selloff may be in order. Price also seems to have formed a sketchy inverse head and shoulders formation, which is also indicative of a possible uptrend. However, stochastic is already indicating overbought conditions so sellers could still take the wheel and push NZD/USD down to the previous lows near .6400.

Forex Chart Settings:

Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line

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.