I’ve got a major reversal and long-term bullish setups on my radar this week.
Don’t miss out on these potentially big rallies on CHF/JPY and natural gas, as well as an incoming downtrend on EUR/USD.
EUR/USD: Daily
Reversal alert!
EUR/USD already tumbled below the neckline of its head and shoulders pattern on the daily time frame, confirming that a selloff is in order.
Is it too late to hop in?
The downtrend is just getting started, as the pair completed a small retest of the broken neckline that seems to have held as resistance.
There’s plenty of room to fall from here since the chart pattern is approximately 600 pips in height, which means that EUR/USD could drop that high!
A bearish moving average crossover can be seen, indicating that selling pressure is picking up, while Stochastic is heading south. Take note, though, that the oscillator is nearing the oversold region to signal exhaustion among sellers.
CHF/JPY: Daily
Bounce or break?
CHF/JPY is hanging out at the very bottom of its daily ascending channel, still deciding where to head next.
Technical indicators are suggesting a continuation of the climb, as the 100 SMA is above the 200 SMA while Stochastic is dipping into the oversold region.
If support holds, CHF/JPY could make its way back up to the resistance levels at the mid-channel area of interest (121.00-121.50) or the channel top (124.00).
Natural Gas: 4-hour
Word through the commodity pipeline is that the U.S. might be on track to seeing the most expensive winter on record this year.
That’s because natural gas has been nearly unstoppable in its climb, especially when it surged past the $5.000 mark.
Price is pulling back to this key level right now, and it looks like buyers are defending the floor. After all, it lines up with a long-term rising trend line that adds to its strength as support.
In addition, the gap between the moving averages is widening to hint at stronger bullish momentum. Stochastic is reflecting exhaustion among sellers, so buyers might be ready to take over from here.
To top it all off, I’m seeing a bullish divergence, too!
With that, natural gas could resume the climb to the upside targets marked by the Fibonacci tool, with the full extension close to $6.100.
