I’ve got a break-and-retest scenario and a long-term wedge bounce goin’ on in today’s canvas. Take a look at these potential long setups on USD/JPY and AUD/CAD!
Earlier this month, USD/JPY broke past its descending channel resistance to show that it’s tired from the dive and that it’s ready for a reversal. Price seems to be due for a pullback from here so I whipped out the Fib tool to spot nearby correction levels.
The 38.2% Fibonacci retracement level is right smack in line with the 112.00 major psychological mark, which means that it could hold as a really strong floor. Not only that, but it also coincides with the broken channel resistance that might hold as support moving forward. Also, it lines up with the 100 SMA dynamic support.
This short-term moving average just crossed above the longer-term 200 SMA to confirm that buyers are taking the upper hand. Stochastic is still heading south in the meantime but is approaching the oversold region to indicate that sellers might want to take a break soon.
Remember that AUD/CAD rising wedge setup I showed y’all last week? Price is now testing support as expected and seems to be going for a bounce back to the resistance.
The 100 SMA is also holding as dynamic support since it lines up with the bottom of the wedge around the 1.0050 minor psychological mark and is also treading above the 200 SMA. At the same time, stochastic is pulling up from the oversold territory to suggest that bulls are about to charge.
This might be enough to take the pair up to the wedge resistance around the 1.0350-1.0400 levels or higher. Stronger buying momentum could even trigger an upside breakout and push AUD/CAD up by an additional 800 pips or the same height as the chart formation. Similarly, a break below the wedge support could take the pair down by 800 pips as well.