Bull and bears are playing a game of tug-o-war on EUR/GBP’s 1-hour forex time frame. Neither side seems to have a clear advantage, though, which is why EUR/GBP’s forex price action has formed a textbook symmetrical triangle pattern. We don’t really have a directional bias. But looking at our technical indicators, we can see that the moving averages have just crossed-over into downtrend mode. However, stochastic is pointing up again after almost reaching the oversold region, which implies strong buyer interest. Furthermore the previous trend prior to consolidating was an uptrend, so the path of least resistance appears to be to the upside. In any case, this forex chart pattern has a volatility of around 220 pips, so the resulting rally or selloff from a breakout would probably have enough momentum for that amount.
As I always say, one of the most conservative ways to play an ascending channel is to look for support and buying opportunities near the bottom of the channel. And as y’all can see, price is at the top of the channel, so conservative forex traders should probably stay away from this one. Anyhow, the moving averages are indicating a healthy uptrend, but stochastic is about to reach oversold territory, even though price is currently milling about at the top of the channel. This could mean that an upside channel breakout may occur. But given how price seems to be having difficulty moving past resistance at 1.1070, I’m more inclined to think that price will continue respecting the channel.
Is the pair gearing up for more downside moves? Sellers have been trying their hardest to push EUR/CAD past the support area at the 1.5250 minor psychological level. However, the support area is well-defended and all attempts have failed so far. But selling interest is so strong that peaks have been trending lower, forming a descing triangle in the process. Anyhow, the moving averages have just recently crossed-over into a downtrend and stochastic keeps getting pushed down without reaching the overbought area, so there’s a good chance that price will keep going down. The triangle’s height is about 300 pips, so a downside breakout may move for the same amount. Do note that the support area at 1.5250 has significant market interest, though, so there’s also a chance that price will break to the upside. As usual, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
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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