It looks like a sexy little range has formed on Cable! As you can see on Cable’s daily chart, price has been bouncing between resistance at the 1.6400 handle and support at the very important 1.6000 psychological number. With the Stochastic at overbought territory and price unable to bust through the top of the range, will we see price start to fall again? If you’re part of the bearish camp, then now is a good opportunity to go short and try to go for the bottom of the range again!
The Fibonacci tool is one of my favorite technical analysis tools because it can be used to predict where price could possibly bounce. If you’ve been watching Pipcrawler’s trade, you’d know what I mean and you would have even caught USD/JPY’s bounce from the 50% Fib last week. Now, it seems like price has managed to fall back to the 50% Fib again. Will we see another bounce? I don’t know for certain, but if we see some reversal candles form like hammers and bullish engulfing, then that could be the case!
Is that a hammer I spot on USD/CAD’s daily chart? Why, yes it is! The combination of the hammer and bullish divergence seem to indicate that the bears are starting to run out of steam. If we see the pair close above yesterday’s high, then the bulls could push the pair to the 38.2% Fibonacci retracement level (.9700).