To head further north or to go back south? NZD/JPY is at a crossroads right now, testing the mid-channel area of interest on its daily forex chart. Price just recently bounced off the bottom of the ascending channel, indicating that the uptrend is still intact and that further gains are likely. However, stochastic is already in the overbought zone, which means that Kiwi bulls are feeling exhausted. A move past the middle of the channel around 90.00 could mean an extended climb until the 95.00 handle. If the 90.00 mark holds as resistance, NZD/JPY could test support around 85.00 once more.
If you’re into momentum trades, then you might like this channel bounce on GBP/CAD’s daily forex chart. Price is moving inside a descending channel and has recently found support at the 1.7500 major psychological level, hinting that it could be ready for another test of the channel resistance near the 1.8300 major psychological level. However, the middle of the channel seems to be keeping gains in check, especially since stochastic is starting to move down from the overbought region. Do watch out for another test of channel support if pound bears stay in control!
Looking for a countertrend setup? Better take a look at this rising channel resistance play on GBP/NZD’s daily forex time frame. After that fake out below the channel support, price bounced right back up to test the resistance near the 2.1000 major psychological level. Stochastic is indicating a pickup in selling pressure, which means that pound bulls might need to take a break and let the bears take over. In that case, price could head back to the bottom of the channel and test support near 2.0000. Just make sure you set wide stops if you’re planning on shorting since this pair can be a volatile one!
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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.