Who’s down to trade reversals with me?
I’m seeing these potential trend shifts on the short-term charts of GBP/JPY and the U.S. dollar index!
Here are the confirmation levels I’m watching.
GBP/JPY: 4-hour
GBP/JPY 4-hour Forex Chart
Be careful, pound bulls!
Guppy is forming a sketchy head and shoulders pattern on its 4-hour time frame, and price is currently testing the neckline around 166.00.
Breaking below this support area could set off a drop that’s the same height as the chart formation, which spans roughly 600 pips.Moving averages are favoring this breakdown scenario, as the 100 SMA just made a bearish crossover below the 200 SMA. At the same time, the pair is inching below the 100 SMA dynamic inflection point.
However, Stochastic is suggesting that sellers might need to take a breather soon since the oscillator is already dipping close to the oversold region. Turning higher would mean that buyers are back in the game and could allow the floor to hold.
If that happens, GBP/JPY could set its sights back on the upside targets around 170.00-172.00.
In any case, keep your eyes peeled for reversal or breakout candlesticks right here!
U.S. Dollar Index (USDX): 1-hour
US Dollar Index (USDX) 1-hour Chart
Is the U.S. dollar bottoming out from its decline?
The USDX seems to be suggesting so, as it forms a double bottom pattern on the hourly time frame. The index has yet to test the neckline near 108.00 and break higher to confirm that an uptrend is underway.A move above the neckline resistance could set off a rally that’s the same size as the formation, so don’t miss it!
Technical indicators are still reflecting bearish vibes, as the 100 SMA is below the 200 SMA to indicate downside pressure.
At the same time, Stochastic is in the overbought territory to show that dollar bulls are getting exhausted. Heading south would mean that selling momentum is picking up, possibly sending the index back down to the latest lows or lower.
