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USD/CAD: 1-Hour

USD/CAD 1 Hour Forex Chart
USD/CAD 1 Hour Forex Chart

After testing support at the 1.1960 handle for the third and last time, buyers took control and sent USD/CAD higher until it reached the 1.2300 major psychological level, whereupon price consolidated tightly into a bullish flag pattern.  But will price continue upwards or will bearish forex traders wrestle control?

Aside from the flag pattern, the 100 SMA is above 200 SMA, showing that the bulls have been in control and that the market is still in an uptrend mode. Also, stochastic is indicating potentially oversold conditions, and now starting to move up already. As for arguments supporting a downside move, there are really only two: (1) price is currently trying to break past a major psychological level and (2) that level has been a price area of significant market interest in the past, so a reversal or a correction is quite possible.

USD/CHF: 1-hour

USD/CHF 1 Hour Forex Chart
USD/CHF 1 Hour Forex Chart

Yup, we got us another bullish flag pattern on yet another U.S. dollar pair. Pretty much all the technical arguments for the flag pattern on USD/CAD can be applied to the the flag pattern for USD/CHF.

The main difference between the two is that the price began consolidating above the price area of significant previous interest around the 0.9400 major psychological level; USD/CHF bulls are winning and have potential to make a new leg higher. In other words, this flag pattern has a higher probability for an upside move than the flag pattern for USD/CAD.

Do make sure to observe how price reacts to the 0.9500 major psychological level, though. That level is in a price area of very, very significant market interest, even on the higher time frames.  Of course, it could also mean that buyers no longer have enough power to push price higher. If that is indeed the case, then we may see sellers coming in soon.

USD/JPY: 4-hour

USD/JPY 4 Hour Forex Chart
USD/JPY 4 Hour Forex Chart

This was supposed to be another flag pattern, but I didn’t want to bore you guys, so I opted to present an ascending triangle instead. While the 4-hour time frame is not exactly ideal for intraday setups, I just couldn’t pass the opportunity to show this massive ascending triangle.

An ascending triangle is generally classified as a bullish area pattern, but as with all triangles, price has a chance of breaking to the other direction as well. In this case, an argument can be made for a downside reversal due to the low momentum as the market approached the resistance area. Also, the stochastic indicator is showing that the rally is probably out of steam, now indicating potentially overbought conditions, so this may be a wait-and-see scenario before we get directional confirmation.

Forex Chart Settings:

Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line

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.