Comdolls have been making a lot of action these days, so I’m looking at a couple of crosses to see if short-term trends might continue or if longer-term reversals are underway.
After breaking past that long-term descending trend line late last year, CAD/JPY returned most of those breakout gains over the past few months. Was this merely a huge correction and is a huge reversal in the works?
Applying the handy-dandy Fib tool on the latest swing low and high on the daily forex chart shows that price already bounced off the 61.8% retracement level. If bulls take the pair back up to the swing high near the 89.00 handle, an inverse head and shoulders pattern could be completed, signaling that more gains are in the cards.
The 100 SMA is moving above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the bounce is more likely to be sustained than reversed. Stochastic is also pointing up to show that Loonie bulls have the upper hand, but the oscillator is already closing in on the overbought zone.
Here’s one for the short-term traders out there! AUD/CHF has been moving in a downtrend, recently creating a new descending channel on its 1-hour chart.
Price has yet to bounce off the resistance area around the 61.8% Fibonacci retracement level and 100 SMA dynamic inflection point. This moving average is below the longer-term 200 SMA, hinting that the selloff could resume sooner or later.
At the same time, stochastic is indicating overbought conditions and is already starting to turn lower. This could draw more Aussie bears to the market and push price down to the swing low at .7270 then onto the channel support closer to the .7200 major psychological level.