Breakout forex traders rejoice because we’ve got a sweet setup on NZD/JPY! Since the beginning of 2016, this pair’s price action has been drawn to the 75.00 – 76.00 area like a moth to a flame, with a steady dose of lower highs and the 74.00 offering solid support.
Basically, we’ve got a descending triangle forming on NZD/JPY, which makes a downside break the move to watch before taking action. But you can’t totally write-off an upside break because as with any consolidation pattern, it’s just a sign that traders are ready to pounce, no matter what the initial breaking directions is!
The Loonie has seen nice gains in the past few weeks against the majors, including the euro, but is that move about to end? It could be, at least in the case of EUR/CAD with the bullish divergence forming on the four hour chart.
The lower “lows” on stochastic and higher “lows” on price action is signal that the probability is high for an upside turn, and the argument becomes stronger when we see this pattern coincide with trendlines or Fibonacci levels. That’s what we’re seeing now as EUR/CAD tests the rising trendline marked on the chart, so it may be a good idea to hold off any new short positions on this pair until there is a clean break of that trendline. If not, the bulls could jump in quickly to bring the uptrend back on track.
GBP/AUD has had a fantastic run to the downside, pretty much going back to the Summer of 2015. Unfortunately for the bears, that run may have to take a pause as we now see a potential double bottom forming around the minor psychological level of 1.8650. There could be resistance at the falling trendline marked on the chart above, but if it breaks, buyers and short position profit takers could change the tune of this pair really quick.