CAD/CHF has been grinding higher in that there ascending channel. And since price is currently testing the channel’s support, now would probably be a good time to start looking for opportunities to go long if you’re bullish on the pair. Just know that price has been having difficulty getting past resistance at the 0.7550 minor psychological level (dashed horizontal line). Also, can you see that falling trend line there? Well, that has been respected since mid-April, and price recently bounced from that, and it also happens to line up with the 0.7550 level, so the path of least resistance appears to be to the downside. All I’m saying is that you may wanna consider a possible downside channel breakout scenario as well, even if you’re bullish on the pair.
Are you getting a sense of déjà vu? If you are, then that’s probably because that’s the updates chart of the ascending channel setup that we had on AUD/USD’s 1-hour chart in yesterday’s intraday forex charts update. And if you can recall, I presented two scenarios and it looks like price took the downside channel breakout route. Anyhow, if you missed that breakout play, then fret not because the pair began pulling back and is currently testing the channel’s broken support area in an attempt to get back inside the channel. And if we apply our Fibonacci tool, we can see that price is currently at the 61.8% retracement level, which gives us another technical argument for resistance to form. If this level holds, then the bears will likely be gunning for 0.7340. And as I said yesterday, a strong break past that would complete a head-and-shoulders pattern that may attract even more sellers.
Price got rejected when it reached the 102.50 minor psychological level, as you can see on that there chart. And as y’all can also probably see, this ain’t the first time that the pair got rejected. Anyhow, if the pair keeps pulling back, then the likely pullback would be at the 104.00 major psychological level since it sits right smack on the 50% Fibonacci retracement level. Not only that, it’s a price with very significant market interest, even on the higher time frames. Just zoom out to the weekly chart and scroll over into 2008 and 2011. And looking at stochastic, the upmove may not be out of steam just yet since stochastic is still pointing up and on its way to overbought territory, so chances are good that price will reach that pullback area.
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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.