Time for a breakout? USD/CAD has been consolidating into a symmetrical-ish triangle pattern on its 1-hour forex chart, which means that the bulls and the bears are playing a tug-o-war at the moment. As a symmetrical-ish triangle, a strong breakout in either direction could take place sooner or later, with the potential rally or selloff lasting by about 170 pips since that is roughly the height of the forex chart pattern. Stochastic is moving higher, indicating that bulls are in control of forex price action for now. The moving averages, meanwhile, are just barely indicating that the uptrend is still intact, so the path of least resistance seems to be to the upside. 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?
USD/JPY has been bouncing around a 110-pip trading range or rectangle since early November, with resistance at the 123.50 major psychological level and support around the 122.40 handle. And as y’all can see, price just recently bounced off the top of the trading range and is making its way down. Looking at our technical indicators, we can see that stochastic is already pointing down and moving away from overbought territory, so forex traders who are bearish on the pair may already be in control. As for the moving averages, they are actually oscillating, so the overall trend is still not clear, but they did recently cross-over into uptrend mode and price reacted when it touched the 200 SMA, so there’s a small chance of an upside rectangle breakout.
Price finally broke past support around the 1.5060 area, but found another support area around the 1.4900 major psychological level and was violently rejected after the second failed attempt. Now, price is back at the support-turned-resistance area at 1.5060. Will price go back down? Applying our Fibonacci tool, we can see that price the 1.5060 price area lines up quite nicely with the 38.2% retracement level. Also, the moving averages are still in downtrend mode, with the 100 SMA acting as dynamic resistance. Moreover, stochastic is already indicating overbought conditions. The only thing we have against us is the really strong bullish momentum, so conservative forex traders may want to wait for confirmation that resistance at 1.5060 is holding before looking for shorting opportunities.
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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