After a major down trend, price is now inching its way higher while milling around inside a pretty obvious ascending channel. As of now, price is testing the bottom of the forex chart pattern, so a trading opportunity may emerge soon, especially if the channel holds. Looking at our technical indicators, the moving averages have been in uptrend mode since last week, but they’re not moving further apart, so the uptrend may not be too healthy. Furthermore, stochastic is currently indicating potentially overbought conditions, and given the longer-term trend, there’s a very real possibility of a downside channel breakout occurring, so make sure to prepare for that possibility as well.
GBP/CHF seems to be bouncing around a 190-pip trading range or rectangle, with resistance at the 1.5100 major psychological level and support at the 1.4910 handle. Price is currently making its way to the top of the trading range, and the way I see it, there are two major scenarios here: (1) price respects the trading range and goes back down once it reaches the top, or (2) price attempts an upside breakout. For the first scenario, we only have the stochastic oscillator, which is currently indicating potentially overbought conditions, to back us up. For the breakout scenario, we have a rising trend line that has been respected at least four times since the last week of August, and price just bounced off that trend line a couple of hours ago.
As y’all know, the safest and most conservative way to play a descending channel is to wait until price moves near the top of the channel. But currently, price is bouncing away from the bottom of the channel, so this setup is clearly a counter-trend setup and should only be for the stout of heart. Anyhow, the moving averages have just crossed-over into downtrend mode, confirming the recent downwards price action. Stochastic, meanwhile, is now pointing up and moving away from the oversold region, so forex traders who bearish on the pair may be exhausted already. As usual, make sure to practice proper risk management should you find a trade based on this or any of the other 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