Bounce or break? EUR/AUD is currently testing the bottom of the descending triangle pattern visible on its 4-hour forex chart, still deciding whether to head back to the top or to breach support at the 1.4000 major psychological mark. Stochastic is turning up from the oversold area, indicating that euro bulls might take control and push the pair up to the triangle resistance at the 1.4100 major psychological level. If euro bears stay on top of their game, a downside break could take place and trigger a 350-pip selloff, which is roughly the same height as the chart pattern.
If you think the trend is your friend, then you gotta take a look at this ascending channel setup on GBP/CAD’s 1-hour forex chart. Price is sitting right on the channel support, possibly gearing up for a bounce back to the channel resistance around 1.9250. Stochastic is still moving up, confirming that buyers still have enough energy to push the pair higher from here. Once the oscillator reaches the overbought zone and turns lower though, price could head back south and probably test the bottom of the channel again. Keep you eyes peeled in case the channel support breaks because this could be a sign that a reversal is about to take place.
Here’s another potential trend play for those who like to go with the flow! AUD/CAD has been moving above a rising trend line on its 4-hour forex chart and is currently testing the support area. This is near the .9600 major psychological level and lines up with a broken resistance zone, both of which might hold as a floor. A bounce could take the pair back up to the previous highs near the .9750 minor psychological resistance or higher, as stochastic is still climbing and showing that Aussie bulls are charging. If sellers jump into action soon, a downside break of the trend line and a selloff towards the next area of interest at .9500 could be possible.
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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.