I couldn’t help but lick my chops when I saw this clean setup on NZD/USD! Just a few hours ago, it formed a doji right under the 50.0% Fibonacci retracement level, which lines up almost perfectly with the .7750 former support area! With the way Stochastic is signaling a bearish divergence, it seems as though the market is suggesting that the pair is getting ready to fall back down. Should that happen, look for price to retest support at around .7650.
Long-term traders will be glad to see where CAD/JPY is at the moment. Very recently, it touched and bounced off a falling trend line, and now it looks as though it’s about to make its way south again. The way I see it, there are two ways you can play this setup. If you think the pair will continue trending down, you may want to short at market and aim for previous lows. On the other hand, if you’re feeling bullish for the Canadian dollar, look to buy the pair when price closes above the falling trend line.
Last but not least, we have EUR/GBP, homies! It’s pretty clear that the British pound has been favored over the euro in the past few days. If you think the pound will continue to dominate its European counterpart, you may want to considering shorting EUR/GBP if and when the pair retests the top of the descending channel. Also, keep an eye on Stochastic as it’s particularly useful in times like these when the market is trading sideways.
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.