Reversal alert! AUD/CAD has formed a head and shoulders forex chart pattern on its 4-hour time frame, suggesting that the previous uptrend is about to turn. The pair has yet to break below the neckline near the 1.0150 minor psychological support but with stochastic moving out of the oversold area, that might not happen anytime soon. If you’re patient enough to wait for a convincing downside break, you might just be in for 200-pip drop, which is the same height as the chart formation.
For the trend playahs out there, this setup is just for you. The downtrend on EUR/GBP is still intact, with the pair trading below a descending trend line on the 4-hour forex time frame. Stochastic is moving down, indicating that selling pressure is still present, while the 38.2% Fib has held as resistance. A higher pullback could lead to a test of the trend line and the 100 SMA resistance, which are in line with the .8200 former support area and the 61.8% Fib level. If you’re planning to short, you might wanna set your stop above the 200 SMA.
Anybody up for a reversal plus trend combo? On its 4-hour forex chart, NZD/JPY has broken above a falling trend line and its yearly highs, which suggests that more gains are in the cards. Before that though, the pair might be in for a quick retest of the broken trend line. A bounce from the resistance-turned-support area, which is somewhere between the 38.2% and 50% Fib levels, could confirm the new uptrend. Make sure you wait for stochastic to reach the oversold zone and turn before going long though!
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.