Are ya on the hunt for a continuation forex chart pattern? Well, you’re in luck since a bullish pennant formed on AUD/JPY’s 1-hour chart after validating that trading range breakout setup that we identified last Tuesday. Anyhow, our moving averages are clearly indicating a healthy uptrend while stochastic keeps getting pushed up to the overbought region without reaching the oversold area, which implies strong bullish interest. And if a breakout does occur, forex traders can expect price to go up by around 200 pips since that is roughly the height of the pennant and its mast or pole.
As I constantly say, one of the most conservative ways to play an ascending channel is to look for buying opportunities near the channel’s support area. Well, that’s where price is currently at, so y’all better start looking. And a quick glance at our technical indicators also show that the moving averages are in uptrend mode, with the 100 SMA acting as dynamic support on at least two recent occasions. Also, stochastic is about to reach oversold territory, so forex traders bullish on the pair may start to nibble soon. The only that worries me is that price has been respecting the mid-channel and has repeatedly failed to reach the channel’s resistance area. That implies strong selling interest, in my opinion. 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, okay?
Time for a breakout? AUD/CAD has been consolidating into a symmetrical-ish triangle pattern on its 1-hour forex chart, which means that bulls and bears are playing tug-o-war at the moment, so we shouldn’t really have any directional bias. But given the big upside move prior to consolidating, the aforementioned triangle pattern also looks like a bullish pennant on the higher time frames, so our directional bias is therefore skewed slightly to the upside. Anyhow, a strong breakout in either direction could take place sooner or later, with the potential rally or selloff lasting by about 350 pips since that is roughly the height of the forex chart pattern. For now, stochastic is indicating overbought conditions while the moving averages have crossed-over to downtrend mode, so we also have technical arguments for a downside move.
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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