Word up, dawg! In today’s intraday charts update, we’ll be taking a stroll down memory lane as we check up on a couple of our old setups. And it goes without saying that we’ll be lookin’ for fresh plays as well.
Back then, the pair was testing the channel’s resistance area at 1.5880 so I told y’all to start lookin’ for opportunities to go short.
And if you were able to find an opportunity to go short, then congratulations on bagging some decent pips ‘coz the pair moved lower for over 200 pips. Aww, yeah!
Anyhow, the downswing was strong enough to cause a downside channel breakout. However, there doesn’t seem to be a lot of follow-through selling. And that gives us two possible scenarios.
The first (and more conservative) scenario is that bulls may try to push the pair back inside the channel and then proceed to test the channel’s resistance area before moving back down again.
If such a scenario plays out, then bulls will likely be gunning for 1.5780. And if we apply our handy Fibonacci tool, we can see that 1.5780 happens to be just above the 50% retracement level, which is another technical argument for resistance to form there.
If you’re gangsta enough, you can even try lookin’ for opportunities to go long and then shooting for 1.5780. Just be warned that going long here would be a counter-trend setup and is therefore extra risky.
Moving on, the second scenario is for a shallower pullback before resuming the downside channel breakout.
In such a scenario, the pair will likely pull back to the 38.2% retracement level at 1.5780 before going back down.
Of course, there’s also a risk that bulls may win out and stage an upside channel breakout. And a move higher past 1.5840 would be an early sign that bulls are taking over. Although the pair would still need to clear 1.5880 before the topside breakout is validated.
If y’all can still recall, we had a Fibonacci retracement setup on EUR/JPY’s 1-hour chart in May 14’s intraday charts update.
And if y’all can also recall, we were lookin’ to go short if 131.30 holds as resistance. Moreover, we were expecting the pair to move lower towards 129.30.
Anyhow, the pullback appears to have formed a double bottom pattern while giving us two possible scenarios.
The first and obvious scenario is the double bottom pattern. A double bottom pattern is a reversal pattern, so we’re mainly lookin’ to go long in this scenario. And all the more so, given that them moving averages just recently crossed-over into uptrend mode.
Basically, we wait for a strong break past the neckline at 131.30. And if that topside break occurs, then we gun for 133.30.
As for the second scenario, well, there’s a possibility that 130.90 may act as resistance since the pair already appears to be hesitating and stochastic is pointing back down again.
If 130.90 holds, then bears will likely try to send the pair back down to 129.30 and possibly even lower.
In any case, just make sure y’all remember to practice proper risk management as always, a’ight? Peace! I’m out!