First up is my favorite break-and-retest situation goin’ on at NZD/USD’s 1-hour forex chart! The pair has just broken through a short-term resistance area at the .8750 minor psychological level and surged close to the .8800 handle. Stochastic is heading lower with a bearish divergence coming to play, which suggests that a pullback might be in the cards. Using the Fib tool shows that the broken resistance level is right in between the 38.2% and 50% retracement levels, which might be a good area to wait for reversal candlesticks and signs that the rally could resume.
Aussie bulls, unite! It looks like AUD/USD is riding another bullish wave on its 1-hour forex chart, as the pair found support at the bottom of the rising channel. Price stalled at the mid-channel area of interest but is showing signs of cruising higher. A convincing break above the .9425 consolidation area could mean that AUD/USD is ready to head to the top of the channel near the .9500 major psychological resistance. Be careful since stochastic is already in the overbought area and is starting to move lower!
Not a fan of the Aussie? Well, here’s a setup to watch if you’re looking to short! On AUD/JPY’s 4-hour forex time frame, a double top chart pattern has formed, indicating that the recent climb might soon reverse. Price is still hovering above the neckline at the 95.50 minor psychological area, but stochastic is indicating overbought conditions. This means that bears are ready to jump in and possibly push for a strong downside break. If that happens, AUD/JPY might fall by as much as 100 pips, which is the same height as the chart pattern.
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.