Trend traders, unite! AUD/USD has been moving below descending trend line on its 1-hour forex chart and looks ready to make a pullback to the resistance area. At the same time, a bearish divergence has formed, as the pair made lower highs while stochastic drew higher highs. Stochastic hasn’t crossed down from the overbought zone yet, which means that the retracement is still in play and using the Fib tool on the latest swing high and low shows that the 50% level lines up with the trend line. A larger correction could last until the 61.8% level, but a break past this area could indicate a reversal. Note that the 100 SMA is treading below the longer-term 200 SMA, confirming that the selloff is likely to carry on.
If you’d rather trade the ranges, then you might like this setup on AUD/JPY’s 1-hour forex time frame much better. The pair is currently testing the range support at the 84.50 minor psychological level, forming a small double bottom pattern right around the floor. Price already broke past the neckline and could be in for more gains, possibly until the range resistance near the 87.00 major psychological mark. However, stochastic is already reflecting overbought conditions while the 100 SMA is below the 200 SMA, suggesting that the path of least resistance is to the downside. In that case, a break below the range support might happen and take AUD/JPY for a southbound ride. Better review our lesson on How to Trade Breakouts if you’re taking that route!
Missed the downside break on AUD/CAD? Don’t fret! The pair might still pull back to the broken support around the .9425 level, which coincides with the 38.2% Fibonacci retracement level based on the latest swing high and low on the 4-hour forex chart. Stochastic is still on the move up, which means that buyers are in control for now, but sellers could take over once it reaches the overbought region. In addition, the 100 SMA just crossed below the longer-term 200 SMA, confirming that bearish pressure is building up. If any of the Fib levels hold as resistance, AUD/CAD could make its way back to the previous lows near the .9250 minor psychological level or create new ones!
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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.