Careful, Aussie bulls! A short-term reversal for AUD/USD might be in order, as the pair is creating a double top pattern on its 1-hour forex time frame. Price has yet to test the neckline support at the .7200 major psychological level and a make a downside break before confirming the potential selloff, which might last by close to 200 pips or the same size as the chart formation. The moving averages look ready to make a downward crossover, possibly confirming the potential downtrend, while stochastic is pointing down and indicating that sellers are in control. If buyers refuse to give way, though, a bounce off the .7200 mark might take AUD/USD back to the previous highs near the .7350-.7400 levels.
Next up is my all-time favorite break-and-retest situation showin’ up on EUR/NZD’s 1-hour forex chart. The pair recently broke below support around 1.6875 then dropped to a low of 1.6513 before pulling back up. Using the handy-dandy Fib tool on the latest swing high and low shows that the 50% retracement level is close to the broken support area, which might now hold as resistance. This is also near the dynamic resistance at the 100 SMA, which is safely below the longer-term 200 SMA, suggesting that the path of least resistance is to the downside. A higher pullback could last until the 61.8% Fib near the 200 SMA, but a break above that level might mean that a reversal is underway. Stochastic is lookin’ up for now, hinting that buyers could still steal the show.
Last but not least is this ongoing trend on GBP/NZD’s 1-hour forex chart. It’s the trend line that keeps on giving! The pair is making another test of the falling resistance level, which coincides with the 100 SMA dynamic inflection point. If this continues to keep gains in check, the pair could move back to its previous lows around 2.2440 or proceed to create new lows. However, stochastic seems to be suggesting that buyers are taking control of the game, as the oscillator looks poised to head north. In addition, price gapped up over the weekend to open slightly above the trend line, which means that pound bulls are eager to charge. The 200 SMA around 2.2900 might serve as the line in the sand for any trend pullbacks, as a break above that level could signal that the downtrend is over.
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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.