First up is a potential countertrend play on EUR/USD, with price testing the top of the ascending channel on its 1-hour forex time frame. It seems to be holding as resistance and stochastic is already indicating that euro bears are in control. If so, EUR/USD could make its way back down to the bottom of the channel around the 1.2450-1.2475 levels. Once stochastic reaches the oversold area and turns, the pair could make another move towards the top of the channel. If you’re bullish on this pair, you might be better off waiting for a test of channel support before going long.
Aha! It looks like a neat retracement play is lining up for GBP/NZD! After breaking below support around the 2.0000 major psychological level, price dipped to the 1.9700 mark and bounced right back up. A correction to the 38.2% Fib, which lines up with the broken support zone, seems to be taking place before the pair resumes its drop to the previous lows or to new ones. Stochastic is already indicating overbought conditions, which suggests that pound bears are ready to push the pair back down. Make sure you set wide stops if you’re trading this volatile pair!
If you prefer trading ranges, then this one’s just for you! AUD/NZD is currently sitting at the bottom of its range visible on the 4-hour time frame, as price is testing support around the 1.0950 minor psychological level. If support holds, the pair could climb back to the top of the range around the 1.1300 major psychological resistance or at least until the middle of the range at the 1.150 minor psychological mark. Stochastic is moving up, which means that Aussie bulls have enough strength to push AUD/NZD up, but a downside break might still be possible. Don’t forget to review our lesson on Trading Breakouts if you think that’s a more likely scenario.
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.