Posted by FxMars
The price did a bullish break through the three times tested resistance at 1.38500 and it got out of the horizontal corridor it has been following for the past two
weeks. Currently, the price is following another, bullish corridor, which walked the price through the upper level of the symmetrical triangle, which lower level is
the bullish trend line from September, 2013. The current bullish movement of the price is in a convergence with the Stochastic Oscillator, which movement could also be
followed by a bullish corridor. Now, after we have the price above the upper level of the symmetrical triangle, it is likely for the price to seek new, higher tops.
For this reason, the first resistance the price would probably meet is the red line at 1.38891, which indicates the last top of the price. If the price manages to
break this level, we could seek a further interaction with the 0.00% Fibonacci level and an eventual break through this level.
On the D1 chart the Yen gives some controversial signals. The first thing we notice is the double bottom formation, which bottoms lay on the pink bullish trend line
from April, 2013. Also, with crossing the 102.749 resistance (also a neck line), the price confirmed the formation, which speaks for an eventual upcoming bullish
movement. On the other hand, there is a clear bearish divergence between the price and the Stochastic Oscillator (blue lines), which contradicts to the already
confirmed double bottom formation. The last bottom from April, 28 sent the price in bullish direction, and a top was created on Friday. The controversial here is that
this is the second top from the divergence between the price and the Stochastic Oscillator. Moreover, the thick red lines on our chart indicate a triangle with a
bearish potential. If the price breaks through the upper level of this triangle, the triangle and the bearish divergence could be considered as fake and we could start
following the already confirmed double bottom formation, which has a potential to meet the price with the upper level of the symmetrical triangle from the beginning of
January and with the blue resistance from May, 2013. The other possible scenario is the bearish one. If the price breaks through the purple bullish trend from April,
2013, which is also the lower level of the bearish triangle, we would have a confirmation of the divergence and we might see the price testing the 101.317 support,
which indicates the bottoms from February 17, March 3, March 17 and April 11.
The cable is still moving in the rising wedge formation from April 10, and it even broke the 1.68355 resistance, which indicates the tops from February 12, April 10,
April 17 and April 22. In addition to the rising wedge formation, which as we all know, has bearish potential, we also have a bearish divergence between the chart of
the price and the Stochastic Oscillator (blue lines). While the price was hitting higher tops, the Stochastic Oscillator was demonstrating a slight bearish movement,
which could be the key answer to the to the question “Where is the cable going?”. If a break in the lower level of the wedge occurs, we could seek a drop at least to
the first bottom of the wedge, which is located on the green straight line at 1.66650. If this happens, this could also mean a break in the lower level of the blue
bullish corridor from the end of September 2013.
After the bearish bounce from the green bearish trend line from April 8, Swissy is testing again the lower level of the symmetrical triangle from March 13. The testing
point of the price also matches with the 0.87783 support (red), which indicates the bottoms April 16, April 17, April 28 and May 1, which means that the price is
testing two levels at once. At the same time, the Stochastic Oscillator is testing the bullish line, which connects its last two bottoms. If a bullish bounce occurs,
we would probably see the price interacting again with the green bearish trend line and eventually with the upper level of the yellow symmetrical triangle. A break
through the red support and the lower level of the yellow triangle would probably bring the price to the 0.87434 support, which indicates the previous clearly stated
bottom of the price. In this case, the Stochastic Oscillator could also be used as a position trigger. If it crosses its bullish trend line in bearish direction, this
could be interpret as a short position signal. If the two lines of the Stochastic Oscillator cross above the blue bullish line, this would clearly support the bullish
The blue bearish corridor from April 10 brought the Aussie through the purple bullish trend line from January 24, but since this trend line covers bigger time frame,
the break is not significant and it could not be said that the level is overpowered already. Furthermore, there is a bullish divergence between the chart and the
Stochastic Oscillator (green). After crossing the purple trend line, the price dropped to the interaction point of the lower level of the blue bearish corridor and the
0.92065 support, which indicates the 1-month low of the price. The followed bounce brought the price back above the purple bullish trend line. Now the price is about
to meet the upper level of the blue bearish corridor. Having in mind that the price has already reached the big bullish trend line, it could be said that the chances
for a break in the upper level of the blue corridor are bigger and the bullish divergence between the chart and the Stochastic confirms this scenario. If this happens,
the next resistance to be met is the red line at 0.93778.
After breaking the symmetrical triangle from March 17 in bearish direction, it could be said that the price is demonstrating an attempt for a change in the trend from
January 8, which is also the lower level of the already broken triangle. On the H4 chart we notice that the gold has already transformed the lower level of the
triangle from a support into a potential resistance. At the same time, the 1306.94 resistance is also a neck line of a potential double bottom formation, which was
created after the break in the triangle on April 24, which makes the two events incompatible. The break in the big bullish trend line is a more significant event than
the potential double bottom formation, which makes the formation not very likely to occur. Furthermore, there is a bearish divergence between the graph of the price
and the Stochastic Oscillator, which supports the change in the trend. At the same time, the Stochastic has just interacted with the 80 level and the two lines are
just crossing, which is another sign for an upcoming bearish activity. If the price bounces from the yellow 1306.94 resistance, the next significant support to be met
is the line 1268.57 line, which indicates the previous big bottom of the price.
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