CAD/CHF finally broke out of that there symmetrical-ish triangle that we first identified back on February 9. As y’all can see, the pair moved for about a hundred pips from its breakout point, so y’all better give yo selves a pat on ya back. And if y’all can still recall, I warned back then that the pair needs to clear 0.7700, since a break ain’t confirmed until and unless the pair smashes through that price level with decent momentum. And as y’all can see, that advice was right as rain, since the pair began pulling back when bullish momentum evaporated shortly after reaching 0.7700.
Looking at our technical indicators, stochastic is already indicating oversold conditions and all that. Them moving averages, meanwhile, have recently crossed-over into uptrend mode. There’s therefore still a good chance that the pair may move higher. And since the pair is presently pulling back, might as well have a Fibonacci retracement setup as today’s play. Know what I’m sayin? Anyhow, all retracement levels look like good areas to watch. However, the most conservative is the 50% retracement level, since it lines up rather nicely with the area of interest at 0.7630. Moreover, if or when the pair does get there, then the 200 SMA may also act as dynamic support.
The descending channel for EUR/NZD, which y’all can still see on that there chart and that we found on February 7, finally got invalidated. However, the pair encountered fresh sellers at 1.4850, causing the pair to pull back. Them bulls ain’t giving up with a fight, though, so they camped out at 1.4660 and repelled the bears. In the process of all that, what appears to be a head-and-shoulders pattern has emerged.
A head-and-shoulders is a reversal forex chart pattern, so we be lookin’ to go long on the pair. The chart pattern ain’t validated yet, though, since the pair has yet to smash past the neckline at 1.4850. But if the pattern does get confirmed, then the resulting upside breakout may have enough steam for a whopping 300-pip move. Just keep an eye on how the pair reacts to 1.4930, since market interest is strong there. So if them bears plan to counter-attack, they would likely be waiting there. Also, just be ready to bail or switch bias if the pair dips back below 1.4660 with great momentum or steadily sinks all the way to 1.4550, since that would that bears have the upper hand. And as usual, just make sure to practice proper risk management, a’ight?
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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.