Lower price highs and higher stochastic highs… Why, that’s a bearish divergence I’m seeing on EUR/GBP’s 4-hour forex chart! After finding a bit of support around the .7600 major psychological level, the pair could be ready to resume its downtrend soon. A higher retracement could still be possible, and the Fib tool applied on the latest swing high and low indicates that the 61.8% Fibonacci retracement level lines up with the descending trend line on the same time frame. Just make sure you set your stop past the trend line and .7800 handle if you’re planning on shorting this one.
Here’s another potential trend line play on a euro pair. EUR/NZD has been trading in a downtrend for the past weeks, creating a falling trend line on its 4-hour forex chart. Price looks ready to make a pullback to the trend line, which is somewhere around the 1.5000 major psychological resistance for now. Stochastic is moving towards the overbought area, indicating that there’s enough bullish momentum to trigger a retracement to the Fib levels marked on the chart. If the selloff resumes, the pair could test the previous lows at the 1.4800 handle or make new ones!
Happy Pip might want to take another chance with EUR/AUD, which seems prime for a retracement again! The pair has bounced off the 1.4000 area and is showing signs of pulling up to the Fibonacci retracement levels on the 1-hour forex chart. Stochastic is heading north anyway, suggesting that euro bulls are in control for now and that price could still pull back to the broken support level at the 1.4400 major psychological mark near the 61.8% Fib. If the retracement is shallow, the 38.2% Fib might already hold as resistance and push price back to the 1.4000 area or lower.
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.