Bears have been trying their best to push the pair lower past support at the 0.8600 major psychological level. However, all attempts have failed so far. The bulls, meanwhile, once staged a major counterattack that allowed the pair to reach as high as 0.8700, another major psychological level. Unfortunately for the bulls, the bears were lying in wait, and so the pair got pushed back to 0.8600. In the In the process, what appears to be a double bottom is beginning to emerge. A double bottom pattern signals a possible reversal, so our main directional bias is to the upside. And if a topside breakout does occur, then the pair may potentially move 100 pips higher. However, keep in mind that the moving averages are still indicating a healthy downtrend, so there’s also a chance that the pair may break to the downside instead.
CAD/JPY recently broke past resistance at the 79.60 handle, which is a price area with significant market interest, even on the higher time frames. Lately, though, the bullish momentum seems to be losing steam. Also, stochastic is already moving lower after milling about in the overbought area. These signals point to a possible pullback. And if a pullback does occur, then the most likely pullback area would be the broken resistance at 79.60. And using our Fibonacci tool, we can see that 79.60 lines up rather nicely with the 61.8% retracement level, which is another technical argument for support to form there. Finally, if the pair does retrace all the way to 79.60, then the moving averages may even act as dynamic support.
Reversal alert! A rising wedge is beginning to form on USD/CHF’s 1-hour chart. A rising wedge is a bearish pattern, so our main directional bias is to the downside. And all the more so since stochastic is already signaling overbought conditions. The wedge is kinda small, though, so if a downside breakout does happen sooner or later, then we can only expect further downside moves of around 80 pips. Of course, an upside move is always a possibility, so prepare for such a scenario as well. And as always, 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.