Looking for a trend play? You might wanna keep close tabs on this uptrend forex setup on EUR/AUD’s 4-hour time frame. The pair has been moving inside an ascending channel for the past few months and seems set to resume its climb. Price is approaching the bottom of the channel near the 1.5000 major psychological level and the 200 SMA, which might hold as support and continue to keep losses in check. The short-term 100 SMA is above the 200 SMA anyway while stochastic is already indicating oversold conditions, which suggests that a bounce is in the cards. In that case, a move back to the top of the channel around the 1.5450 to 1.5500 levels could be in order. Just watch out for a candle close below the channel support in case the pair is ready to reverse!
Next up this break-and-retest scenario on EUR/JPY’s 1-hour forex chart. The pair recently surged past the key resistance around the 137.00 major psychological level then zoomed up close to the 139.00 handle before pulling back. Using the Fib tool on the latest swing low and high shows that the 50% retracement level coincides with the broken resistance, which might now hold as support. The moving averages and stochastic seem to be hinting that the rally could resume at some point, with a shallow pullback likely to find support at the 38.2% Fib or the 200 SMA. If any of the Fibonacci levels hold as support, the pair could make its way back to the previous highs and beyond, but a break below these retracement areas could be a sign that a reversal is brewing.
Reversal alert! EUR/NZD seems to be tired from its recent climb, as the pair formed a double top pattern on its 1-hour forex chart. This suggests that a short-term selloff might take place as soon as price breaks below the neckline around the 1.6815 level or the 200 SMA. If that happens, the pair could fall by around 250 pips or the same height as the chart formation. However, if the neckline refuses to break, another top could be formed just below the 1.7100 handle. Take note that the 100 SMA is moving above the 200 SMA while stochastic is in the oversold area, suggesting that the path of least resistance is to the upside. Better review our lesson on How to Trade Double Top Patterns if you’re hoping to trade this 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.