USD/JPY has been consolidating into what looks like a symmetrical(ish) triangle or a bullish pennant on the higher time frames. A symmetrical(ish) triangle doesn’t really have a directional bias, but I personally have an upside bias for this chart because the 100 SMA and 200 SMA are in uptrend mode. Not only that, if we apply multiple time frame analysis, we can see that the trend is also up on the 4-hour, daily and weekly times frames, so more forex traders are probably bullish on this pair.
After taking a dive and then being rejected at the 0.8820 handle, price began consolidating between the 0.8930 and 0.8880 handle and formed a rectangle pattern or trading range. As a rectangle in a downtrend, our directional bias is also down. But given how price was rejected at the 0.8820 handle, an upside breakout could happen too. Personally, I think that price will use the rectangle as a trading range since volatility has been lackluster in this pair lately, but that’s just me.
Isn’t that just a thing of beauty? CAD/CHF has been gracefully going down in a very neat descending channel, being marred only by that fake breakout to the downside. So what’s today’s play? Well, I have three scenarios in mind: (1) price respects the descending channel, or (2) an upside breakout happens, or (3) a downside breakout occurs. I have three scenarios because of that price area of previous market interest around the 0.7500 major psychological level (highlighted by the rectangle). It could be that price is attempting to break past it, in which case we may have an upside breakout. And if price uses it as a launching zone, then a downside breakout may occur.Also, stochastic is currently in oversold territory, hinting that sellers may be exhausted and making an upside move possible.
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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.