First up is that there bearish pennant on NZD/CHF. As y’all can see, the pair spiked lower before abruptly stopping when it reached the price area of interest around the 0.6690 handle. The pair then traded sideways after that, forming a nice, little bearish pennant in the process. The height of the pennant and its mast is only around 70 pips, so a break lower would probably only last for the same amount. Be careful, however, since there’s a chance that support at 0.6690 will hold and the pair could go up instead. Our technical indicators seem to favor further down moves, though, since the moving averages are just about to cross over into downtrend mode. And while stochastic is near the oversold region, it’s currently pointing down, so forex traders bearish on the pair may still be control for now.
Next, we’ve got another bearish pennant for NZD/USD. Okay, it looks more like a bearish flag, but both forex chart patterns are essentially the same. Anyhow, the forex chart pattern formed when the pair surged lower before trading sideways when it found support around the 0.6630 price area. The chart pattern is about 130 pips in height, so we can probably expect a down move of the same amount after a breakout. Also, the moving averages are already in downtrend mode while stochastic is milling about near the oversold area, which could mean that selling interest is so strong that stochastic can’t move higher. Let me just warn you that this setup is similar to the NZD/CHF pennant setup above in that the price area of significant market interest at 0.6630 may potentially hold, which could result in the pair going higher, but our indicators and price action seem to favor a down move more.
The last entry is yet another bearish pennant. This time, I’ve got one for NZD/JPY. Unlike our setups for NZD/USD and NZD/CHF above, NZD/JPY didn’t find support at a recent price area of interest, although the 78.60 handle where price is currently milling about is a price area of interest on the higher time frames. In any case, the height of the forex chart pattern is around 130 pips, so a potential breakdown past 78.60 could last for that amount. Our moving averages are also indicating a healthy downtrend while stochastic seems to be having trouble going back up, so bears may still be in control. As usual, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
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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