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GBP/JPY: 1-Hour

GBP/JPY 1-hour Forex Chart
GBP/JPY 1-hour Forex Chart

Area pattern time! GBP/JPY has consolidated into a symmetrical triangle (or a bullish pennant on the higher time frames). There shouldn’t be any directional bias since the area pattern is a symmetrical triangle, but I’m leaning more towards an upside move since the the bullish momentum is rather strong. The 100 SMA and 200 SMA are also indicating a healthy uptrend, with the 100 SMA acting as dynamic support to boot. Stochastic is also about to move into oversold territory, hinting that sellers may potentially be losing steam soon.

GBP/CAD: 1-Hour

GBP/CAD 1-hour Forex Chart
GBP/CAD 1-hour Forex Chart

Yep, I’ve got another area pattern, so area pattern time! This time, we’re looking at an ascending channel. Specifically, we’re looking at a downside breakout from an ascending channel. I see three major scenarios here: (1) price goes along its merry way to the downside, (2) price moves back into the channel, and (3) price tries to move back into the channel, fails, and then resumes moving downward.

Personally, I favor a return to the ascending channel because the overall trend is still healthy and because the 100 SMA is acting as dynamic support. Also, price is currently near the 1.9390 handle, which is a price area of  previous market interest in the past, so we may see some buyers coming in. In addition, stochastic is currently in oversold territory, which further reinforces the technical argument for buyers to start coming in.

GBP/USD: 1-Hour

GBP/USD 1-hour Forex Chart
GBP/USD 1-hour Forex Chart

I couldn’t find another area pattern to complete the set, so have this break-and-retest setup instead. GBP/USD broke through the major psychological level at 1.5800, but encountered a large number of forex traders bearish on the pair. As a result, price has been forced back into the 1.5800 level. Will support form here or will the bears push price back even further

I think support will form here since the bullish momentum was very strong. The moving averages are also in uptrend mode, with the overall trend still intact, as shown by the unbroken uptrend trend line. Furthermore, price is using the 100 SMA as dynamic support and stochastic is currently indicating potentially oversold conditions.

It’s quite possible that price will test the trend line first before resuming the uptrend, though. It’s also quite possible that price will move to the downside, especially with the right fundamental catalyst, so make sure to practice proper risk management should you find a trade based on this chart.

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.