If you think you’ve seen that chart before, that’s probably because you have. You see, that there is an updated chart of the descending channel setup that we identified on AUD/CAD’s 1-hour chart back on Monday. I’d also like to note that we were looking to short the pair back then and that it moved over 100 pips lower to the channel’s support area, so congratulations if you were able to ride it down. Anyhow, the pair bounced off the channel’s support area and is now back near the channel’s resistance area. Our main play for the day is therefore to look for opportunities to go short again. The pair has already reached the mid-channel area, though. In addition, stochastic has already reached oversold territory, while price seems to be hesitating at the 1.0000 major psychological level. There is therefore also a chance that the pair may attempt an upside breakout instead.
Price action on USD/CAD’s 1-hour time frame has been consolidating into what appears to be a rising wedge. A rising wedge is a bearish chart pattern that forms in a downtrend. But since the pattern formed while price has been trading mostly sideways, you may also want to consider the possibility that the pair may break to the topside instead. In any case, the pattern is about 230 pips tall, so a breakout in either direction could potentially last for the same amount. For now, though, an upside breakout seems more likely, since stochastic has reached oversold territory while the moving averages are in uptrend mode.
If you’re feeling gangsta enough for a counter-trend trade, then check out that ascending channel setup for CAD/CHF. As y’all can see, the pair is currently milling about near the ascending channel’s resistance area. The said resistance area also happens to line up with the 0.7470 handle, which is a price area with significant market interest that can be seen even on the higher time frames. In addition, stochastic is already signaling overbought conditions. There is therefore a higher-than-average chance that resistance will form here, and that the pair may be sent lower. The only thing to worry about here is that the 200 SMA appears to be acting as dynamic support.
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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.