If you’re into momentum trades, then you should take a look at this NZD/USD forex reversal play! As I’ve mentioned a few weeks back, the pair has formed a double top pattern on its daily chart, indicating that a long-term selloff is about to take place. Price has already broken below the neckline around the .8400 major psychological level and appears to be headed lower. Take note that the chart pattern is roughly 400 pips in height and, with NZD/USD already down by roughly 100 pips from the neckline, it could still have around 300 pips to go!
Here’s another forex breakout situation on a longer-term time frame! CAD/JPY had been trading inside a descending triangle pattern on its daily chart before recently breaking to the upside. This suggests that the pair could be in for more gains of possibly around 900 pips, which is the same height as the chart pattern. For now though, stochastic is already indicating overbought conditions, which means that a pullback might take place before CAD/JPY heads further north. Keep your eyes glued to the broken triangle resistance since this area might serve as support.
For all the short-term traders out there, here’s one for you! AUD/USD is currently testing support at the bottom of its rising forex channel on the 1-hour time frame, suggesting that a bounce might take place. After all, stochastic is already in the oversold area and may be due to move higher sooner or later. The latest selloff was pretty sharp though, which suggests that Aussie bears might still be feeling pumped and ready to push for a breakout. On the other hand, a move back above the .9300 major psychological level could be a sign that Aussie bulls aren’t gonna give up too easily.
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.