One top, two tops… Why, that’s a double top forex chart pattern right there! AUD/USD could be in for an uptrend reversal once price breaks below the neckline of the chart formation around the .9250 minor psychological support. Since the pattern is roughly 150 pips in height, the resulting breakdown could be of the same size. Stochastic is still pointing up, indicating that Aussie bulls are in control at the moment, but this might just be a temporary pullback before a large drop!
Who’s in the mood for a short-term divergence play? On its 1-hour forex time frame, NZD/USD has drawn lower highs while stochastic has made higher highs, suggesting that a selloff might take place. This could last until the nearby support level at the .8550 minor psychological handle or probably even lead to a break below that floor. Save for that spike earlier this week, the pair has been forming lower highs, which means that Kiwi bears are eager to push the price lower.
If you’re a trend trader, then you might like this USD/CAD channel setup better. It appears that the pair is still trying to form a rising channel on its 1-hour time frame and is currently testing the bottom. A bounce from the support area around the 1.0850 minor psychological level could take USD/CAD back to the channel resistance at 1.0950 or at least until the middle of the channel at 1.0900. Take note that stochastic has just reached the oversold zone, indicating that a bounce could take place sooner or later.
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.