AUD/JPY moved with great bearish momentum last week, but did not have enough “oomph” to break away from support at 81.90 and has now formed a mini double bottom pattern. If the mini double bottom gets invalidated (stochastic is indicating overbought conditions, after all), and the pair manages to push away from support at 81.90, then the bears will likely be gunning for the 80.00 major psychological level. But if support holds and the double bottom is validated, then the pair will likely pull back to 83.70, which just so happens to sit right smack on the 50% Fibonacci retracement level, so keep an eye on that area when or if a pullback does occur.
As I always say again and again (like a broken record), one of the more conservative ways to play a descending channel is to look for shorting opportunities near the top of the channel. Unfortunately for conservative forex traders, this ain’t a conservative setup since price is nowhere near the channel’s resistance area. Also, the channel hasn’t really been validated yet since price has yet to go back up.
However, aggressive traders who are looking to go long on the pair may be happy to know that a mini double bottom has now formed, which is a reversal pattern. Hmm. Another double bottom on yet another yen pair. Anyhow, y’all may wanna wait for a clean break of the price area at the 154.90 handle before loading up, though, since there’s a chance that the pair will respect the 154.90 handle and go back down, given that stochastic is already in overbought territory.
A mini double bottom has formed on EUR/JPY’s 1-hour chart (*gasp* another one). And this time, we’re looking to play the double bottom since the support at the 123.20 handle seems to be very well-defended. Anyhow, the forex chart pattern’s neckline is at the 124.20 handle while the potential target area is at the 125.30 area. They’re also at price areas with major market interest, even on the higher time frames, so make sure to keep a close eye on ’em. And 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.