Check out this channel I’m watching on Cable! The pair has been in a short-term downtrend, trading inside a descending channel on its 1-hour forex chart. Price seems ready to head down from the resistance near the 1.5300 major psychological level, as stochastic is moving down from the overbought zone and reflecting a pickup in selling pressure. In that case, a test of channel support near the 1.5200 major psychological mark might take place and lead to another bounce back to the top. If you think the trend is your friend and you’re planning to hitch a ride down, just make sure you set your stops above the channel resistance!
Who’s up for a countertrend trade? If you’re gutsy enough to go against the flow, you gotta take a look at this potential short setup at the ascending channel resistance on GBP/NZD’s 1-hour forex chart. The pair is nearing the top of the range near the 2.1600 major psychological handle, which might continue to hold as resistance. Stochastic is almost in the overbought region too, so sellers might take control from here. If that happens, the pair could make its way back down to the bottom of the channel near the 2.1200 to 2.1300 levels or at least until the middle of the range around the 2.1400 major psychological mark.
Here’s another potential trend channel play on a pound pair, but this one still seems to be establishing its direction. At the moment, GBP/JPY is testing the channel support on its 1-hour forex chart, still deciding whether to make a bounce or a break. Stochastic is already indicating overbought conditions, which means that buyers are already exhausted and might need to take a break soon. In that case, a downside break of the channel support around the 189.50 minor psychological mark might take place and signal a potential selloff. On the other hand, if the channel support continues to hold, GBP/JPY could climb back to the previous highs around 191.00.
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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.