Got a couple of yen crosses and a European mix in the house today! Check out these potential forex plays while they’re hot.
First up is this update on the EUR/GBP pullback setup from the previous week. The pair already made it to the correction zone I’m looking at and might be ready to resume its drop.
Stochastic is already turning lower after a brief stay in the oversold region, suggesting that bears are eager to return. However, the support-turned-resistance area is closer to the 50% Fib so a higher pullback might still be possible.
As for downside targets, the swing low could serve as near-term support while sustained bearish pressure could take the pair down to the channel bottom at the .8650 area.
Next up is this potential reversal formation on the short-term chart of CAD/JPY. The pair seems to have formed a head and shoulders pattern, which is a classic selloff signal.
Price has yet to break below the neckline at the 85.50 area to confirm the potential slide, which might last by around 400 pips or the same height as the chart pattern.
Last but certainly not least is this simple channel setup on the 1-hour time frame of NZD/JPY. Price is just creating a short-term ascending channel and is bouncing off the top.
If this area keeps gains in check, a pullback to support around the 61.8% Fib near the channel bottom might be due. A shallow correction could bounce off the 38.2% level at the mid-channel area of interest before resuming its climb.
Stochastic is just halfway through on its move to the oversold area, which means that sellers could have enough energy to push for a deeper pullback.
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