First one up for today is a simple Fib play on EUR/JPY. After hitting bottom at the 127.00 area, the pair has jumped and is now testing a 61.8% Fib retracement level. What makes this setup interesting is that the area also lines up nicely with the 128.50 minor psychological handle 100 SMA on the 1-hour chart. The cherry on top of the setup sundae is an overbought signal from Stochastic. Think we’ll see more losses for the euro? Whatever strategy you choose in trading this setup, just remember that crosses like EUR/JPY tend to be more volatile than the usual suspects. Gotta make ’em stop losses wide if you’re trading this one!
Here’s another retracement play for ya! AUD/NZD has bounced from its 1.0550 low early this week and is now showing a bit of a bounce. The bulls and bears may be watching the 1.0650 MiPS, which is a solid area of interest back in December and is currently where the SMAs and 50% Fib retracement level are. Not only that, but Stochastic is also nearing the overbought territory. A stop just above the support zone could make for a good reward-to-risk ratio if you believe that the pair would head back to its weekly lows. Just make sure that you have your trading plans ready! You never know when a news event would pop up to mess with technical setups like these.
Last but definitely not the least is a potential support play on USD/JPY. Unless you’ve been too busy reading up on the Oculus Rift release, then you should know that USD/JPY has been trading lower all week and is now below the closely-watched 118.00 area. Not all hope is lost though, as the 117.50 level is still pretty significant after serving as support back in early 2015. Will the 117.50 handle hold? I don’t recommend market entries for strong moves such as what we’re seeing. It doesn’t hurt to watch the pair for consolidation or further downside breakouts though. If price breaks below the area, then we could be looking at a possible move to the 110.00 levels. Keep close tabs on this one, fellas!
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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.