Is that a descending channel forming on GBP/USD? After all, this playa just formed succeeding lower highs and lower lows! With Stochastic about to crossover from overbought conditions, I wouldn’t be surprised if the bears come back in force and push the pair lower. Of course, a solid bullish candle close above the recent highs would indicate that the channel is invalidated, and could signal a stronger move higher.
After making a run at 1.3700, EUR/USD has come crashing back down to earth, having dropped over 300 pips from its highs. Is this the end of the bullish run, or are the bulls just waiting for the right opportunity to strike again? Keep an eye out for the 1.3280 level, as it’s served as a major level of interest in the past. I suggest waiting for some reversal candlesticks at this level before jumping in with more buy positions.
Look out USD/JPY! The good times might be coming to an end soon! A doji, a spinning top, and a bearish red candle have just formed in succession on the daily chart, which is a sign of a potential top. With Stochastic stuck in overbought territory for the longest time, this could finally be the time for a correction on this pair. If you’re more of the cautious type, you can wait for Stochastic to move below 80.0, or for more candlestick confirmation, such as three black crows to form, before going short.
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.