Will EUR/USD finally close its weekend gap? By the looks of it, the pair seems ready for a midweek reversal. The 61.8% Fibonacci retracement level, which was right smack at the falling trend line on the 4-hour time frame, held like a boss and forced EUR/USD to retreat. Stochastic is pointing down, suggesting that euro bears are waiting to pounce. If they do, they could take EUR/USD back to its recent lows near 1.3200 or even lower!
Aaaah… Breakout! Cable just broke above the neckline of the inverse head and shoulders pattern, hinting that the pair’s downtrend is over. I took a quick peek at the “How to Trade Chart Patterns” lesson in the School of Pipsology and remembered that the size of the breakout is usually equal to the height of the formation. In this case, the chart pattern is approximately a hundred pips tall. If GBP/USD bounces from the 38.2% Fib, which is closely in line with the neckline, the pair could start an uptrend and rally by a hundred pips or so.
Last but not least, check out the rising channel on USD/CHF’s 4-hour chart! Looking pretty neat, huh? The pair’s uptrend is still intact as it just bounced from the bottom of the channel and seems to be headed back to the top. Stochastic is pointing up, which means that buyers could take the pair all the way up to the .9400 major psychological handle and close the weekend gap. If you’re banking on a breakdown though, you might want to get schooled on spotting breakouts first!
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.