Reversal alert! GBP/USD seems to be breaking out of that complex inverse head and shoulders pattern on its daily forex chart, hinting that a long-term uptrend might take place. Price seems to be testing the resistance at the 1.5800 major psychological level, which was the pair’s highest level so far this year. Stochastic is already indicating overbought conditions so a pullback might be in order, but a sustained upside break could lead to a rally of around 1,200 pips, which is the same height as the chart formation. For now, the short-term 100 SMA is below the 200 SMA, suggesting that the downtrend could still resume.
Looking to trade the pound against the euro? Here’s a simple trend setup on EUR/GBP’s 1-hour forex chart. The pair has been cruising inside a descending channel since the start of this month and seems ready to test the resistance once more. Price just bounced off support around the .7150 minor psychological level and the bottom of the channel and might be headed for the top around the .7175 to .7200 area. At the same time, stochastic is moving up and inching close to the overbought zone, indicating that there’s a bit of bullish momentum left for a climb up to the channel resistance. This area also lines up with the short-term 100 SMA, which is moving below the 200 SMA and indicating that the selloff could carry on.
Still holding out for a breakout? Then you might wanna keep close tabs on this symmetrical triangle formation on AUD/USD’s 1-hour forex chart. The pattern is still intact for now though, and price just came off a test of the triangle resistance around .7750. Stochastic is starting to move down from the overbought area, which means that a move back to the triangle support near the .7700 major psychological level is in the cards. The SMAs are moving back and forth, confirming that price could stay in consolidation mode for a bit longer, but a breakout in either direction could last by at least 250 pips or the same height as the triangle formation.
Forex Chart Settings:
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.