Price spiked higher with convincing momentum before abruptly stopping and then consolidating just below the price area of interest around the 0.6650 minor psychological level. In the process, a bullish flag has formed. A bullish flag is a continuation forex chart pattern, so our main directional bias is therefore to the upside. However, stochastic is already pointing downwards and has even started moving away from overbought territory. This could mean that forex traders who are bearish on the pair may be attempting to wrestle control for the bulls. If that is indeed the case, then there’s a chance that price will use the 0.6650 level as a launching pad for a downward move instead.
After breaking past resistance at the price area of significant market interest around the 2.3370 handle, price then pulled back to the previous resistance-turned-support area, giving us a textbook break-and-retest setup. Looking at our technical indicators, the moving averages are clearly in uptrend mode, and the 100 SMA is even acting as dynamic support to boot. As for stochastic, it’s clearly making its way up and moving away from the oversold region, so bulls may be in control already.
NZD/JPY finally broke out of a well-respected descending channel. However, the pair immediately encountered a lot of sellers upon breaking out, resulting in a pullback. There weren’t enough bears to push price back into the channel, though, and price held steady while using the 200 SMA as dynamic support. Price action is hinting that the pair is ready for an upside move, but our technical indicators say otherwise since the moving averages are still indicating a downtrend while stochastic is presently pointing down. Stochastic is about to reach the oversold area, however, so be careful. In any case, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
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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