Up first is this sweet-lookin’ potential double top on the 1-hour forex chart for EUR/GBP. Price tried to break past resistance around the 0.7220 handle but failed miserable and got pushed down to the 0.7160 handle. Now, the pair is trying yet again to break past resistance at the 0.7220 handle.
If forex traders bullish on the pair fail to push price further again, and the bears manage to take control and kick price back down to the neckline at the 0.7160 handle, then we got us a confirmed double top. If there is enough bearish momentum to break past the neckline then price could move for about 60 pips since that is the height of the forex chart pattern? Oh, if you’re wondering, 60 pips is pretty big relative to this pair since the average daily volatility is only about 60-70 pips.
Price popped down while I was making this chart, so I updated it to show the breakout. As you can see, price is breaking out from a rising wedge formation and may move for at least a hundred pips, based on the height of the chart pattern. Perhaps it could move even more since the moving averages are showing a healthy downtrend and stochastic is pointing downwards but hasn’t reached the oversold region yet, so forex traders bearish on the pair may still be in control. Of course, there’s always a possibility that this breakout is a false one, and price would eventually creep back into the pattern and form an ascending channel instead.
After being repelled at the 1.1430 handle, AUD/NZD went into a long downtrend. The pair then hesitated a bit when it reached the 1.1200 major psychological area, but eventually decided to grind even lower. Now, price is hesitating again at the 1.1030 handle, consolidating into what looks like a descending triangle (or a bearish pennant on the higher time frames). Since it’s a descending triangle, our directional bias is therefore to the downside. Also, the 100 SMA and 200 SMA are also moving further apart, indicating a strong downtrend.
As with all triangles, there also a chance that price will break in the opposing direction, and prudent forex traders should take that into consideration. The stochastic oscillator, for one, is pointing up, indicating that buyers may still be in control.
As usual, make sure to practice proper risk management should you find a trade based on any of these charts.
Forex Chart Settings:
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.