Let’s start the day with a look at the most traded currency pair: EUR/USD. After days of falling, it looks like the pair could exhibit a short-term reversal soon. For one, the pair has formed a falling wedge. Second, the 1.3000 level is fast approaching. More than being a significant psychological level, it is a level that has held as major support in the past. And last, a bullish divergence has formed as price has been making “lower lows” while the Stochastic has been flat.
Yesterday, the AUD/USD was finally able to bust out of its trading range and pierce through support. It fell sharply and then formed what traders call a “bearish flag.” The bearish flag is a continuation pattern that suggests that price could fall again after a small pause. Now, I’m not saying that the pair will certainly drop, but it is a likely possibility.
It looks like USD/CAD has found itself dancing back and forth within a very tight 70-pip range for a few days now. The pair is currently trading at the top of the range, testing .9950 resistance level to see whether it will hold or not. If you’re part of the bear camp, look for a potential short trade in the event that bearish candlestick patterns form. On the other hand, if you’re bullish on the pair, wait for a significant close above .9950 to confirm your bias.
To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.
Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.