Looks like the ascending channel that we discovered back on Monday is still intact. In fact, it went down over 160 pips before shooting up by over 200 pips since last we saw it, so give yourself a pat on the back if you were able to get a ride in either direction (or both). Going back to today’s play, the channel is still intact, as I noted earlier. So why not play it again? If life give you lemons, go make some lemonade, right? Anyhow, price is currently testing the channel’s resistance area. In addition, stochastic is already signaling overbought conditions. There’s therefore a chance that the pair may get pushed lower soon. Do be careful, though, since the bullish momentum of the current upswing seems rather strong. Also, more conservative forex traders should know that going short near an ascending channel’s resistance area is a counter-trend setup. As such, the available setup is therefore more risky than usual.
Back on Monday, I told y’all to make sure to wait for support to actually form before going long based on the rectangle pattern that we identified back then. Well, that turned out to be good advice because the pair dipped lower past support at 1.2010 before rebounding hard. And after taking the most recent price action into account, the rectangle pattern on GBP/CHF’s 1-hour chart has now evolved into a descending triangle. And it just so happens that the pair is testing the channel’s resistance area. In addition, the moving averages are now in downtrend mode. Moreover, stochastic has been staying close to overbought territory. Y’all therefore better start looking for opportunities to go short. Like our setup for GBP/JPY above, however, the bullish momentum of the current upswing seems rather strong. So do be extra careful and wait for resistance to actually form before going short.
GBP/NZD broke to the downside from the symmetrical triangle pattern that we identified back on Monday. However, the pair only moved lower for about 160 from the breakout point before buyers pushed the pair back up again. Hopefully, you were able to grab some pips before price went back up again. Anyhow, we can now see that a descending channel appears to have formed after updating our charts. And like our setup for GBP/CHF, price is currently testing the channel’s resistance area. Likewise, stochastic is indicating overbought conditions. And as usual, just remember 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.