Yo forex homies! I’m seeing strong long-term trends on GBP/AUD and CHF/JPY but there seem to be signs of a turnaround, too.
This one has been trading safely above an ascending trend line since mid-2016 and is making another test of the rising support area. Will it still hold?
Sellers might have a bit of an edge right here as a head and shoulders pattern has formed and its neckline is right smack on the ascending trend line. This means that a break below the 113.50 to 114.00 zone could be enough to confirm that a reversal is underway.
On the other hand, a bounce could ensure that the rally would resume. The 100 SMA is above the longer-term 200 SMA after all while stochastic is indicating oversold conditions and ready to turn higher.
GBP/AUD is also in a pretty strong uptrend and has just made its way past the mid-channel area of interest on its daily chart.
This could pave the way for a move up to the long-term channel resistance around the 1.7700 handle, where plenty of take-profit orders are likely located.
Stochastic is on the move up but is already in the overbought zone to reflect rally exhaustion. Meanwhile, the 100 SMA is trying to cross above the longer-term 200 SMA to suggest more bullish momentum.
If you’re feeling gutsy, you could wait for an actual test of the channel resistance to go for a countertrend play. Just make sure you make good risk management decisions, aight?