Looks like a massive 500-pip trading range or rectangle is beginning to form on GBP/CHF’s 1-hour chart, with resistance and support at the 1.4250 and 1.3750 minor psychological levels respectively. The forex chart pattern has not been validated yet, though, since price has yet to test and get rejected at the resistance level, but previous price action shows that resistance at the 1.4250 is well-defended. Price is currently moving up and stochastic is beginning to point up as well. Moreover, price has been closing above the moving averages and the moving averages look like they’re about to cross-over into uptrend mode, which implies that buying interest is strong. Oh, if or when price finally reaches the resistance area, don’t be in too much of a hurry to short the pair since a break of the resistance area could mean that we’ve got a confirmed double bottom, so watch out for that.
Price finally broke past resistance at the 0.6630 handle with sufficient and convincing momentum, but got rejected when it reached the 0.6710 area and is now pulling back, giving us a textbook break-and-retest setup to play with. Applying our Fibonacci tool, we can see that the most conservative pullback area is at the 50% retracement level since it sits right smack at the 0.6630 broken resistance/potential support. Looking at our technical indicators, it’s promising that the moving averages have just recently crossed-over into uptrend mode while stochastic is still making its way down, so the pullback move may not be over just yet.
Like yesterday’s setup for CAD/CHF, a descending triangle has now formed on AUD/CHF’s 1-hour time frame even though the previous trend before the pattern formed was an uptrend, so this is pretty weird. Anyhow, a descending triangle is a bearish forex chart pattern, but it would probably be wise not to have a strong directional bias, given that the prior trend was an uptrend. And assuming that a breakout does occur, the resulting rally or selloff may likely have enough steam for a 200-pip move, based on the height of the triangle. Anyhow, 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.