Time for a breakout? NZD/JPY has been consolidating inside a symmetrical 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 triangle, a strong breakout in either direction could take place sooner or later, and the potential rally or selloff may last for around 300 pips since that is roughly the magnitude of the triangle’s base. Again, we don’t really have a directional bias, but stochastic is moving lower, indicating that bears are in control of price action for now. The moving averages are also indicating that the downtrend is still intact, with the 200 SMA acting as resistance.
Is AUD/JPY in for more downside moves? Based on the 1-hour chart, it looks like the pair has been consolidating into what appears to be a rising wedge pattern, which suggests further declines for the pair. The overall trend is still down, but the moving averages have just recently crossed-over into uptrend mode, which is a bit of a confidence breaker. Bearish interest seems to be strong, however, since stochastic is already pointing down again after having left oversold territory not so long ago. In any case, if the bottom of the wedge is broken with convincing and sufficient bearish momentum, then the pair could move lower for about 400 pips since that is roughly the height of the forex chart pattern.
Price has been consolidating ever tighter as forex traders try to push price this way then that, but the bulls and the bears are roughly of equal strength, which is why we have yet another symmetrical triangle pattern for yet another yen pair. Let me just reiterate that we don’t really have a directional bias, but the long-term trend is still down and the moving averages on the 1-hour time frame are still indicating a downtrend, so the path of least resistance is most likely to the downside. Moreover, stochastic is already indicating overbought conditions. Anyhow, if the triangle does break in either direction, then the resulting move may have enough momentum for a whopping 700 pips, based on the the height of the pattern’s base. As usual, 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