Both USD/CAD and EUR/JPY are hitting their channel resistance levels at the moment so I’m keeping an eye out for potential declines and corrections. Here’s what’s up!
This pair has been movin’ and groovin’ inside an ascending channel visible on its 4-hour forex chart and is starting to make a turnaround from the resistance near the 1.3800 major psychological level.
Applying the handy-dandy Fibonacci retracement tool on the latest swing low and high shows that the 50% level coincides with the 1.3500 major psychological handle and the mid-channel area of interest. This also lines up with a former resistance zone which might hold as support moving forward.
To top it all off, the 100 SMA dynamic support is also within this area of interest, adding to its strength as a potential floor. The 200 SMA is close to the 61.8% Fib, which might act as a floor as well.
Stochastic is pointing down to show that sellers are taking control of price action, confirming that an uptrend correction is underway. If a larger pullback is due, an actual test of the channel support closer to 1.3300 could take place.
This one’s just in the process of forming its ascending channel pattern on the daily time frame, depending whether or not this resistance area around 124.00 is able to keep gains in check.
Stochastic is already indicating overbought conditions, which suggests that buyers are feeling exhausted from the climb and might be ready to book profits from here. Besides, EUR/JPY has yet to fill its gap from the other week all the way down to the 117.00 levels.
Price is also stalling around a support-turned-resistance area so there’s a good chance that euro bears are waiting for their turn to take control at this point. However, the 100 SMA is safely above the longer-term 200 SMA so the path of least resistance is to the upside. In other words, there’s still a pretty good chance for the uptrend to resume sooner or later!