Daily Forex Chart Art – August 7, 2015

GBP/USD: 1-hour

GBP/USD 1-hour Forex Chart

GBP/USD 1-hour Forex Chart

Remember that GBP/USD ascending triangle setup I showed y’all yesterday? Well, price broke to the downside, which means that pound bears are in charge and that further losses are likely. Note that the forex chart pattern is approximately 300 pips tall so the resulting selloff could be of the same size. In addition, the moving averages are starting to make a downward crossover, suggesting that a downtrend is underway. For now, the pair has formed a bearish flag consolidation while sellers are still waiting for more folks to join their group. However, buyers might still have a shot at pushing prices higher since a bullish divergence has formed. See how the pair made lower lows while stochastic made higher lows? That could mean that a pullback to the broken triangle support around the 1.5550-1.5600 area might take place.

GBP/CAD: 1-hour

GBP/CAD 1-hour Forex Chart

GBP/CAD 1-hour Forex Chart

Next up is this neat break-and-retest situation on GBP/CAD’s 1-hour forex time frame. The pair recently made a strong break past the resistance around 2.0320 then climbed all the way up to 2.0630 before pulling back. Using the handy-dandy Fib tool on the latest swing low and high shows that the 61.8% retracement level lines up with the broken resistance, which might now hold as support. Stochastic is also hinting at a potential bounce, as the oscillator is showing a bullish divergence with its lower lows while price made higher lows. If the 61.8% Fib holds as support. GBP/CAD might make its way back up to the previous highs and beyond. On the other hand, a break below the 2.0320 area could mean a move towards the next support near the swing low at 2.0125.

USD/CAD: 1-hour

USD/CAD 1-hour Forex Chart

USD/CAD 1-hour Forex Chart

Here’s another potential pullback opportunity you might be interested in. USD/CAD has been in an uptrend, trading above a rising trend line connecting the recent lows on the 1-hour forex chart. The pair looks ready to make another test of the trend line, which is near the 38.2% and 50% Fib levels. In particular, the 50% Fibonacci retracement level lines up with the 200 SMA and an area of interest, which might keep losses in check and allow the uptrend to resume. The 100 SMA is above the 200 SMA anyway, confirming that the longer-term climb could stay intact, while stochastic is showing a bullish divergence with its lower lows. A bounce off the 50% Fib could mean a move back to the previous highs just past the 1.3200 major psychological resistance, but a break below the 61.8% Fib and 1.3000 mark could set off a reversal.

Forex Chart Settings:

Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line

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.