Gotta love ’em pullbacks! It looks like USD/CAD is in for a huge retracement and a possible retest of the broken resistance level around the .9950 minor psychological mark. Now that’s right in line with the neckline of that double bottom formation I mentioned before and the 50% Fibonacci retracement level on the 4-hour time frame. That bullish divergence seems to have materialized too but I’d wait for stochastic to start moving up or reversal candlesticks to form before jumping in!
If you’re a fan of breakout plays, then this setup could be just for you! EUR/JPY has been edging higher and higher these days as the pair made higher highs and higher lows. However, it appears that a rising wedge is forming on the 1-hour time frame and that a bearish divergence has just materialized. Will we see a breakdown soon? Make sure you set those stops right if you’re planning to trade this one!
Here’s another potential retracement play on a dollar pair. In yesterday’s chart art, I mentioned that GBP/USD could be in for a tiny pullback but it seems that this pair is gearing up for a MAJOR pullback! I snapped on the Fibs on the 4-hour chart and noticed that the pair could still go as high as the 1.5850 area, which is around an area of interest and close to the 38.2% Fib. Stochastic is already in the overbought zone though, suggesting that pound bears could pounce soon.
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.