If y’all can still recall, we originally had an ascending channel for GBP/NZD. And last time we checked up on the pair was on December 19. Back then, we wuz waiting for the pair to go back down after finding resistance at 1.7940. Stochastic was indicating oversold conditions and all that at the time. I therefore warned those of ya who were gangsta enough to short at 1.7940 to be extra careful. Anyhow, if you wuz able to find an opportunity to short, then you be over 350 pips richer already. You got bread, dawg, so congratulations.
Getting back to today’s play, what looks to be a symmetrical triangle pattern has emerged, once we take into account the latest price action. A symmetrical triangle means that bulls and bears are having a go at each other, but neither side has a clear advantage. As such, the pair could potentially bust out of their direction. Know what I’m sayin?
And if a breakout in either direction does occur, then the pair may have enough steam for a whopping 600-pip move, based on the height of that there chart pattern. Just keep an eye on how the pair reacts to 1.7940 (for an upside breakout) and 1.7510 (for a downside breakout), since those are areas of interest that have recently served as resistance and support respectively. If momentum weakens when the pair gets close to those price areas, then be ready to bail out in order to preserve yo profits ‘coz price could potentially reverse direction.
EUR/JPY broke out of that there ascending channel back on December 21. And back then, I gave y’all two major scenarios: (1) the pair reenters the channel or (2) the pair uses 122.80 has a diving board to plunge lower. And obviously, the pair followed the second scenario. However, I also told y’all that the pair needs to smash past the 121.10 handle before y’all can chillax. And as it turns out, buyers were waiting at 121.10, so the downside move got cut short. So much for that! In the process, however, the pair ended up trading sideways while trapped in that there rectangle pattern above.
The pair is presently gunning for the rectangle’s support area at 121.10, so if you be planning to trade within the range, then you better start looking for opportunities to go long. And all the more so, given that stochastic be indicating oversold conditions already. As usual, though, just make sure to practice proper risk management should you find a trade based on this or the other chart, a’ight? Okay, I’m out. Peace!
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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.