I’m seeing consolidation patterns on the 4-hour charts of AUD/JPY and NZD/JPY.
Think these pairs are due to break out soon?
And which direction might they go?
AUD/JPY: 4-hour
First up is this rising wedge pattern formed by higher lows and slightly higher highs on AUD/JPY.
The pair has been stuck in this consolidation pattern so far this year, and it looks like it’s ready to bust out soon.
Price is hovering close to the wedge resistance just past the 93.00 handle, and moving averages are suggesting that a bullish move is possible.
If that happens, AUD/JPY might be in for a rally that’s the same height as the formation, which spans roughly 600 pips.
However, Stochastic is hinting at quite the opposite, as the oscillator is prepping to head south from the overbought region. This signals that sellers are ready to take over while buyers are exhausted, possibly taking price back down to the wedge support at 92.00.
If bearish pressure is strong enough, the pair might be in for a downside break and a selloff that’s the same size as the wedge!
NZD/JPY: 4-hour
Lower highs and higher lows… Why, that’s a symmetrical triangle pattern right there!
Well, sort of.
NZD/JPY might be gearing up for an upside breakout from its consolidation pattern, with technical indicators reflecting the presence of bullish vibes.
For one, the 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside. To top it off, the moving averages are holding as dynamic support levels as well.
Stochastic is pointing up, so price could follow suit while buyers have the upper hand. The oscillator has room to climb before reflecting exhaustion among bulls, so a rally of the same size as the triangle might be in the cards.
Make sure you keep your eyes peeled for long green candlesticks closing past the triangle top and 84.00 handle!
