This here is the updated chart of Tuesday’s setup on AUD/NZD’s 1-hour forex chart. And it looks like the pair followed my alternative scenario and found resistance at the 1.3000 major psychological level instead of at 1.1230, but the resulting down move was rather short-lived. Which is why I now have two major scenarios for the pair: (1) price will respect the descending channel pattern and make it’s way back down, or (2) forex traders bullish on the pair are attempting an upside breakout from the channel.
Personally, I think both scenarios are just as likely to occur since stochastic just moved away from the overbought region and price seems to have difficulty getting past the 1.1250 minor psychological level, which supports an argument for further downside moves. But on the other hand, the moving averages just recently crossed-over into uptrend mode and price actions shows that the bearish momentum quickly disappeared, so an upside breakout move is a possibility too.
The pair has been slowly grinding higher but kept finding resistance at the 0.8680 handle, thereby forming what appears to be an ascending triangle. As an ascending triangle, our main directional bias is for an upside breakout, but since this is a triangle forex chart pattern, there’s also a good chance that it will breakout in the opposite direction. Stochastic, for one, is already indicating potentially overbought conditions, so forex traders bullish on the pair may be exhausted already. If the triangle does break, there is a good possibility that the resulting move will have a volatility of around 270 pips since that is roughly the height of the triangle.
EUR/NZD has been respecting an ascending channel for over a month now, but it kept finding resistance at the 1.6780 handle. AS y’all know already, the conservative way to play an ascending channel is to look for support near the bottom of the channel, and lucky us since price is currently near the bottom. Stochastic is also currently in oversold territory, so the bears may be exhausted already. There is a chance for a downside breakout of the channel, though, since the resistance area around the 1.6780 handle seems to be rather strong.
In any case, make sure to practice proper risk management should you find a trade based on any of these charts.
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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.AUD/CAD 1-hour Forex Chart