After falling to the 1.5000 psychological area, GBP/USD has zoomed back up and recovered by at least 300 pips. Right now the bears are successfully holding the 1.5330 area while a rising trend line indicates that the bulls still have some muscle left in their hustle. Are we seeing a bullish pennant in the making? A quick look at the School of Pipsology tells us that an upside breakout could be at least 150 pips big. If you’re one of them pound bears though, then you’ll also notice that the pair is lollygagging at Fib levels on the 1-hour time frame and that the 200 SMA remains unbroken. In this case a short around the current levels with a stop just above the SMA could also get you a couple of pips.
Forex bulls and bears are in a tug-o-pips battle on USD/JPY’s chart. The pair saw a weekend gap to the downside and is currently hanging around its weekly open levels. What makes this setup interesting is that it’s now at a falling channel support, which also lines up with the 200 SMA on the 1-hour time frame. Oh, and let’s not discount a possible bullish divergence in there! A long trade with a stop just below the SMA could give you a couple of pips if you think the 200 SMA and channel support would continue to hold. Meanwhile, the bears could wait for a retracement to the 122.80 channel resistance area if you think the pair isn’t done falling just yet.
Here’s a range setup that you can trade wit your eyes closed! GBP/CAD is once again finding resistance at the 2.0275 area, a level that the bulls haven’t broken since mid-October. Not only that, but I’m also seeing a potential bearish divergence on the 4-hour time frame. A stop just above the range could give you at least 200 pips if you aim for the range support. If you don’t think the range would hold though, then you could also wait for an upside breakout (and maybe a break-and-retest scenario) before putting on any long trades. Just make sure you manage your risk, aight?
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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.