First up is this sexy little treat from EUR/USD! Take a look at this pair’s daily chart and you’re likely to see a very tempting retracement play in the works. The area of 1.4000, which lines up almost perfectly with the 61.8% Fibonacci retracement level, presents a sweet spot to short, considering it was once a formidable support zone. Furthermore, Stochastic is already overbought and signaling a bearish divergence! Sellers may take the pair back down to the previous low at around 1.3200 if they can manage to gain control of EUR/USD. On the other hand, if buyers can force a breakout above 1.4000, they could boost price all the way back up to 1.4500.
Call an ambulance, we’ve got a broken neckline here! After forming a perfect head and shoulders pattern, USD/CHF bears proceeded to sell the pair to break the neckline at .8900. Now that this critical support level is out of the way, it looks like the coast is clear for sellers to keep selling. If you’re not quite ready to get on the bear bandwagon, you may want to wait for a retracement before you short the pair. The area of .8700 looks like a reasonable profit target for those of you who think USD/CHF will continue to slide.
Last but not least, we’ve got an off-the-heezy-fo-sheezy potential retracement play on GBP/USD! It looks to me like buyers have run out of steam after rallying strongly above 1.5850. As a matter of fact, price is already stalling below the 1.5950 minor psychological handle. If this level holds, the pair could end up retracing its footsteps all the way to the 38.2% Fib level. Remember, this Fib is just a few pips away from 1.5850, which was once a solid resistance level. As such, this area could very well hold as support should price fall back down to test it.
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.