After validating that there double bottom pattern, EUR/NZD surged higher until it encountered fresh sellers at the 1.5550 minor psychological level, which gives us two scenarios: (1) a bounce and (2) a breakthrough. The main argument for a breakthrough scenario is that price has been closing above the 100 and 200 SMAs, which implies strong bullish interest. Also, the two moving averages are about to cross-over into uptrend mode. Stochastic has been milling about the overbought area, though, which favors a bounce scenario. Also, 1.5550 has significant market interest and the long-term trend is still down. In any case, just make sure to practice proper risk management, alright?
The double bottom on EUR/NZD’s chart is already stale, but don’t worry because a double top is currently baking in GBP/CAD’s 1-hour chart. There’s no guarantee that the potential double top pattern will get validated, though, especially since the moving averages are in uptrend mode, with the 100 SMA acting as dynamic support to boot. Conservative forex traders may therefore want to wait for a strong downside breakout, or a pullback after a downside breakout before jumping in. And if a breakout does occur, the pair could potentially move lower for about 350 pips, based on the height of the chart pattern.
NZD/USD has been grinding ever higher while bouncing up and down inside that there ascending channel. And you probably know what I’ll say, but I’ll say it anyway. One of the more conservative ways to play an ascending channel is to look for opportunities to go long near the channel’s support area. And lucky us, since that’s where price is currently at. it’s also good that stochastic is near oversold territory, but do be careful since it’s pointing back down again, which could mean that sellers are not out of steam just yet.
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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.