Reversal alert! AUD/USD has been going down rather smoothly until it reached the 0.7400 major psychological area. The pair then tried to penetrate that area again but failed on that attempt too, thereby giving us this potential double bottom on the 1-hour forex time frame. The conservative way to play this forex chart pattern is to wait for an upside breakout past the neckline at the 0.7500 major psychological level. And should a breakout occur, we can expect price to move for about 100 pips since that is the height of the formation. But since stochastic is already indicating potentially overbought conditions, there is also a chance that price will form a trading range instead.
Looks like we got us another reversal pattern in the works. EUR/CAD’s recent price action has caused it to form a messy-looking head-and-shoulders pattern on the 1-hour forex chart. If a breakdown does occur, we can expect the pair to move for around 250 pips, based on the height of the forex chart pattern. The 100 SMA is still above the 200 SMA, and the moving averages are far apart, so the uptrend is still pretty healthy. As for the stochastic oscillator, it is already pointing down after staying in the overbought region for a while, so bears may already be in control.
Bounce or break? AUD/JPY began grinding higher while respecting an ascending channel after finding support around the 89.40 handle. The vanilla way to play an ascending channel is to look for support near the bottom of the channel. And we’re pretty lucky since price is currently testing the bottom of the rising channel on its 1-hour forex time frame. In fact, price has been hugging the bottom of the bottom of the channel for a while now that I’m beginning to suspect that forex traders bearish on the pair may be attempting a downside breakout. From the looks of it, price is having difficulty pushing past the 91.70 handle, a price area of recent market interest. The moving averages are still in downtrend mode, but are beginning to come closer for a potential cross-over. Stochastic, meanwhile, is still in overbought territory.
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.