Breakout alert! USD/JPY’s range, the one that has been intact since early November, has finally seen a breakout yesterday. The pair touched an intraday low at 121.08 and is now trading just above 121.50. With Stochastic in the oversold region, the dollar is open to a move back to the 122.30 range support (and 50% Fib) for a break-and-retest trade. A short at the levels could get you some pips if you don’t think that we’re seeing a fakeout and that USD/JPY will drop back to yesterday’s lows. Of course, you could also buy at current levels with stop losses below 121.00 if you think that the dollar would recover its pips from the yen.
Breakout setups not your thing? Here’s a possible trend reversal for ya! After hitting bottom at the 2.0400 area, GBP/AUD has steadily climbed and is now at the 2.0700 levels. What makes this setup interesting is that the 1-hour chart is now sporting an SMA crossover where the 100 SMA is now above the 200 SMA. The last time the pair has seen a crossover was back in mid-November right before it dropped by a nice 1,000 pips. Think we’re seeing another trend reversal today? You could wait for a couple more candlesticks to confirm a potential uptrend but it doesn’t hurt to bust out your trend-following strategies and systems as early as today.
Somebody holler at Happy Pip because this setup is too good to miss! USD/CAD is lollygagging around the 1.3550 area, which isn’t surprising since it’s hitting a rising channel resistance that hasn’t been broken since mid-October. Will the resistance hold for another day? Stochastic is currently on the bears’ side with its overbought signal. A short at current levels could make for a good trade if you’re one of them dollar bulls and you think that USD/CAD would revisit its channel support. On the other hand, you could also wait for a breakout (and maybe even a retest) if you think that the consolidation that we’re seeing is only signalling a pause from the bulls.
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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.