Bounce, bounce! For the fourth straight time, GBP/USD was unable to go above the major 1.5200 psychological handle. The pair was deflected strongly, and it seems to be rapidly making its way back down to the 1.5000 area. If you’re holding on to a short position, then you’re in luck, as the pair won’t be encountering a significant support level any time soon! Do be careful about the oversold Stochastic though, as it could mean that the bears are starting to run out of momentum.
If you’re into uptrends rather than downtrends, then my trade setup on USD/CHF might tickle your fancy. The pair has been moving up for quite a long time now, making “higher highs” and “higher lows.” Last Friday, the bears attempted to break the trend, but they ultimately failed and the pair moved higher again. Given how price has managed to stay above the rising trend line and the oversold Stochastic, we may see price make another bullish run and post new highs again!
I don’t usually analyze the U.S. dollar index, but when I do, I make sure it counts! As you can see from the daily chart, price is starting to exhibit signs of pulling back. The Stochastic has been heavily overbought and is starting to move down. Meanwhile, price action has stalled and has been unable to make a new significant high. I don’t know about you but if this keeps up, we might see the index retest the broken resistance level at 82.00. After all, the level also lines up nicely with the 38.2% Fibonacci retracement level.
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.