Let’s start off with a simple break-and-retest forex situation that’s already starting to play out! EUR/USD has recently broken below the 1.2450 minor psychological support and dipped to the 1.2350 area before pulling back up for a retest. The former support area appears to be holding as resistance for now while stochastic is indicating overbought conditions, a sign that euro bears might be ready to take control soon and push EUR/USD back to 1.2350 or lower. A higher retracement, however, could still take the pair up to the 61.8% Fib level or the 1.2500 major psychological mark.
Time for a reversal? USD/JPY has been climbing non-stop for the past weeks, only to form a double top forex chart pattern on its 1-hour time frame recently. A break below the formation’s neckline could confirm that a short-term selloff is in the cards, as price could drop by as much as 150 pips. In that case, the pair could move all the way down to the next support region around 113.00-113.25. Stochastic is almost in the oversold region though, hinting that a bounce could take place and push USD/JPY back to its previous highs near the 115.50 minor psychological mark and beyond.
Check out the confluence of potential resistance levels on GBP/USD! The pair appears to have found support at the 1.5800 major psychological handle and is due for a pullback to the Fib levels on the 1-hour time frame. Price could pull up to the falling trend line connecting the recent highs, as the 61.8% retracement level lines up with the 100 SMA and is near the 1.5900 mark. Stochastic has already reached the overbought area, suggesting that sellers could jump in sooner or later. The shorter-term SMA is still moving below the longer-term 200 SMA anyway, which means that the downtrend could carry on.
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.