Were yesterday’s moves big or what! Cable found support at the 200 SMA yesterday and it is currently lollygagging just above the rising trend line that it broke this week. Are we looking at a support-turned-resistance scenario? Or are the bulls back on their track to push GBP/USD to its new monthly highs? Stochastic is currently on the bears’ side with an overbought signal, but you could always wait for more candlesticks before you commit to a direction. Read up on trading in trending conditions if you haven’t tried it yet!
Looks like GBP/AUD broke above the resistance levels that we were watching yesterday! This time around the pair is hanging out at the 1.9150 minor psychological area, which is right smack at the 200 SMA on the 1-hour chart. Not only that, but Stochastic is popping up an overbought signal! A short trade at current levels could get you a good reward-to-risk ratio if you aim for the pair’s previous lows. Just make sure you allow for loose stop losses! See, currency crosses like this one tend to be more volatile than the majors. You wouldn’t want to get stopped out when you’re trading the right direction, right?
Here’s another one for trend warriors! EUR/GBP ended the tug-o-pips happening at the 200 SMA by rocketing from .7750 to the .7850 levels. Does this mean that EUR/GBP’s uptrend is still on? Pound bears can wait for retracements or at least a couple more bullish candlesticks for entry opportunities, while the bulls can watch out for a possible bounce at the .7900 major psychological handle and an oversold Stochastic signal. Be careful in trading against the trend though, unless you’ve done it before and you have a trading strategy set for countertrend trades.
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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.