Did y’all catch that strong upside breakout on USD/CHF? If not, don’t fret! You might have another chance to catch a quick rally since price is forming another bullish flag on its 1-hour forex chart. Now the mast of the flag is approximately a hundred pips tall so the resulting break could be of the same size, assuming the pair makes a convincing climb past the consolidation resistance around 1.0320. The 100 SMA is currently above the longer-term 200 SMA, which means that there’s a good chance that the uptrend could carry on. However, stochastic is starting to make its way down, indicating that buyers are already feeling exhausted. If a downside break takes place, USD/CHF might pull back to the previous area of interest just above the 1.0200 handle before resuming its rally.
Reversal alert! USD/JPY seems to have had enough of its downtrend, as the pair formed a double bottom forex chart pattern on its 1-hour time frame. Price is still testing the neckline resistance around the 123.00 major psychological mark, with an upside breakout likely to confirm that an uptrend is underway. For now, the 200 SMA is holding as a dynamic resistance level, and the 100 SMA is far below it so the path of least resistance is to the downside. In addition, stochastic is indicating overbought conditions and is turning lower, also suggesting that sellers are still in control. In that case, another move towards the bottoms at 122.25 might be in order. But if buyers refuse to give up in pushing the pair higher, a neckline break could send USD/JPY around 75 pips north.
Here’s another potential reversal play on AUD/USD, although that seems to be a pretty sketchy double top formation right there. But with gold prices tumbling to their six-year lows, the positively-correlated Aussie might also be in for declines. The pair is on its way to test the neckline of the chart pattern around .7160 and a breakdown could send it at least a hundred pips lower, which is the same height as the formation. However, technical indicators are hinting that sellers are losing energy at this point. Stochastic is already in the oversold area and is turning higher, which means that buyers might take over. Also, the 100 SMA is safely above the 200 SMA so further gains might be possible. If so, AUD/USD could simply bounce off the neckline and make its way back to the tops around .7270.
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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.