I’ve got a couple of classic chart patterns and a textbook break-and-retest scenario on my radar for this week. Take a look!
Is my one good eye deceiving me or is that a sketchy head and shoulders pattern on the short-term chart of NZD/JPY?
The pair already seems to have broken below the neckline as confirmation that a selloff is in order, but a quick pullback appears to be happening right now. If the broken support around 75.50 holds as a ceiling and stochastic heads back down from the overbought region, bearish momentum might pick up.
The chart pattern spans around 150 pips in height, so the resulting downtrend could be of the same size.
This pair has been selling off for the past few weeks, but it looks like another test of a key support level is in order.
Zooming out to the daily time frame reveals that AUD/CAD is inside a descending triangle formation and is nearing the bottom at the .9600 major psychological mark.
Stochastic has some room to head lower, which suggests that bears could stay in control for a bit longer until oversold conditions are seen. If buyers return at that point, support could hold and push the pair back to the triangle top at parity or at least halfway through.
Last but certainly not least is this fresh breakdown on the 1-hour chart of EUR/CAD. Price breached support at the 1.5300 major psychological level and dipped to 1.5175 before signaling its intention to pull back.
Applying the handy-dandy Fib tool on this move shows that the 50% to 61.8% retracement levels line up with the area of interest and a potential descending trend line.
Stochastic is already indicating overbought conditions, though, and it may just be a matter of time before it moves back south. Once it does, sellers could return sooner rather than later and spur a shallow correction.
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