Currently, the four major forex pairs (AUDUSD, EURUSD, GBPUSD, and USDJPY) are maintaining a strong trend formation, which will likely continue. Although several of them are over-extended on either the 60-minute or 240-minute chart, and there could be a pullback, the trend strength is remaining strong. In this article, both the 60 and 240-minute charts will be analyzed for potential pullback areas and trend continuation patterns.
Although neither the 60 or 240-minute charts are overbought, the 60-minute chart is showing potential volume divergence on the highs with price being at an area of resistance (white dot). This indicates that a retracement down to the ATR (blue plus sign) is likely. Although it may be a little early in the bar formation with 30 minutes remaining on the 60-minute chart, the current price bar is forming a reversal bar, as well.
The EURUSD charts below show that the higher timeframe (240 minutes) is overbought, using the stochastics, at a point of resistance (white dot) with trend divergence on the lower timeframe (60 minutes). Additionally, the ADX is indicating a strong uptrend but is also overextended on the lower timeframe. A pullback down to the ATR on the 60 minute is probable before the trend continues on to make new highs.
The 240-minute GBPUSD chart shows it is overbought, using the stochastics, with a potential reversal bar forming (although this bar just began forming and has 3 1/2 hours remaining). The 60-minute also has a reversal bar forming and trend divergence showing on the stochastics (higher highs in price with lower highs on the stochastics). More likely than not, the price could pullback on the 240-minute chart before breaking through the line of white dots later in the week.
Currently, the USDJPY is only oversold (using the stochastics and ADX) on the 60-minute chart. Additionally, the 60-minute is showing that sellers are decreasing as new lows are formed. This formation indicates a probable move up to the ATR (red plus sign). If price tests the red ATR with hidden divergence appearing, then it is very probable that price could exceed the prior low.