Pound bulls must’ve gotten spooked by this double top pattern on Cable’s daily time frame! GBP/USD has yet to break below the 1.6000 major psychological support and the neckline somewhere around the 1.5900 area before a longer-term downtrend is confirmed, but it wouldn’t hurt to keep this pair on your watch list until then. Stochastic is moving down from the overbought zone, which means that pound bears are in for a treat!
Now here’s a pair that’s already ripe for the picking! NZD/JPY is already testing the neckline of the double top pattern on its 4-hour time frame, suggesting that a breakdown might be just around the corner. However, stochastic has yet to make its way to the overbought territory before Kiwi bears could pounce. Better keep your eyes glued to the 80.00 to 81.00 area if you’re waiting for a strong break to the downside.
Heads up! This one’s already breaking down! EUR/AUD seems ready to head in the southbound direction, as the neckline of the double top pattern on its 1-hour chart already appears to be broken. Stochastic is also edging lower, which means that there’s enough selling pressure going around. The pattern is roughly 75 pips tall so the resulting selloff could be of the same size, but make sure you review our lesson on trading breakouts before jumping in!
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.