Here’s an update on the AUD/USD descending triangle setup I showed y’all yesterday. As expected, the pair climbed to test the triangle resistance after bouncing off support at the .7200 major psychological level. Right now, the top of the triangle is able to keep gains in check, as it lines up with the dynamic resistance at the 200 SMA. Speaking of moving averages, the 100 SMA is still safely below the 200 SMA, which means that the path of least resistance is to the downside. Another test of the triangle support might be in order, but stochastic is suggesting otherwise. The oscillator is making its way higher, hinting that buyers are taking control of forex price action. In that case, an upside break past the triangle resistance around the .7275 level might still be possible.
Next up is this simple break-and-retest situation goin’ on in USD/JPY’s 1-hour forex time frame. The pair previously broke above the falling trend line connecting the latest highs of price action then zoomed up to a high of 121.50 before pulling back. Using the handy-dandy Fib tool on the latest swing low and high shows that the 50% retracement level lines up with the broken resistance and might hold as support. This coincides with the long-term 200 SMA, which could also serve as a dynamic inflection point. In addition, the moving averages just made an upward crossover, indicating that further gains are likely. Stochastic is pointing down for now, which means that buyers are taking a break and letting sellers take care of the pullback.
Is that a bearish flag I’m seeing on EUR/NZD’s 1-hour forex chart? The downtrend has been going on for quite some time, showing that euro bears are feeling pumped up and might be strong enough to push for a downside break of the short-term consolidation pattern. If so, the pair could fall by around 600 pips, which is the same height as the mast of the bearish flag. The 100 SMA is below the 200 SMA anyway so the selloff is likely to carry on. However, stochastic is heading north, indicating that euro bulls might charge. If that happens, the pair’s gains might be limited to the resistance at the descending trend line and moving averages near the 1.6500 major psychological mark.
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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.