GBP/NZD has been steadily moving higher while trapped inside an ascending channel. Conservative forex traders may wanna sit this one out, though, since price has already reached the mid-channel area. However, price seems to be hesitating at the moment, and stochastic is already indicating overbought conditions, so forex traders who are bearish on the pair may start jumping in soon, which may cause price to retest the channel’s support area. It also means that there’s a small chance for a downside channel breakout, so prepare for such a scenario as well.
EUR/GBP has been trading sideways while respecting resistance and support at the 0.7900 and 0.7700 respectively, giving us a 200-pip trading range or rectangle to play with. A conservative way to play a rectangle is to trade within the range, so get ready since price is making its way down for a potential test of the support area at the 0.7700 major psychological level. There’s a good chance that price will go back up without testing support, or even attempt an upside breakout, however, since the moving averages are already in uptrend mode and the 200 SMA even seems to be acting as dynamic support while stochastic is already indicating oversold conditions.
As I keep saying again and again, one of the more conservative ways to play a descending channel is to look for selling opportunities near the channel’s resistance area. And lucky us since that’s where price is currently at, so y’all better start looking. Looking at our technical indicators, the moving averages are indicating a healthy downtrend, with the 200 SMA acting as dynamic resistance to boot, which is a real confidence booster that the channel’s resistance will hold. And while stochastic is indicating overbought conditions, it’s still pointing up, which is a bit worrying since it may mean that forex traders who are bullish on the pair may not have given up just yet. As usual, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
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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.