Divergence alert! NZD/CAD has created lower highs while stochastic made higher highs, creating a bearish divergence on its 1-hour forex chart. This could be a sign that the pair is ready to resume its drop, possibly until its previous lows near the .8950 minor psychological support zone. Before that though, NZD/CAD could still attempt to test the falling trend line resistance on the same time frame, as this lines up with the .9050 minor psychological mark. Make sure you review our lesson on Trading Divergences if you’re planning to short this one!
Here’s another potential trend and divergence play on CAD/JPY! Price has made higher lows while stochastic drew lower lows, creating a bullish divergence right on the ascending forex trend line on its 1-hour chart. Since the oscillator has already climbed out of the oversold zone, it could mean that Loonie bulls are ready to charge and push the pair back up. A rally to its latest highs near the 97.70 area might take place if buying pressure is strong enough, but a return of sellers could take CAD/JPY below the trend line. Watch out for a potential reversal if that happens.
Bounce or break? GBP/CAD is currently testing the falling trend line on its short-term forex chart while stochastic is deep in the overbought zone. Once the indicator starts moving lower, price could head back down too and possibly test the former lows near the 1.7500 psychological support zone. If pound bulls refuse to give way though, GBP/CAD might have a shot at breaking above the trend line resistance and starting a new uptrend. A strong break past the 1.7950 to 1.8000 psychological levels could be enough to confirm a breakout so don’t forget to read our lesson on How to Trade Breakouts to avoid getting faked out!
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.