Is that a top I see? Quite possible since price was unable to close above the 61.8% Fibonacci retracement level and the candlestick that touched that level had a very long upper shadow! This could mean that a lot of bears were waiting in that area to do the good ‘ol “sell high” style. If you’re bearish on the pair, this could be a nice opportunity to jump in the overall downtrend!
What usually happens to a resistance level when price manages to pass through? It becomes support of course! This is exactly what happened to GBP/JPY yesterday. Price fell back to the broken falling trend line resistance, found support, and shot back up! With the pair making a new “higher low,” this could mean that the trend has indeed reversed and price could climb higher.
For my final chart analysis, let’s hop on over to AUD/USD. As you can see, price managed to finally break through the falling trend line support and mark a new swing high. But with the Stochastic showing severely overbought conditions, AUD/USD retracing back to the 38.2% Fibonacci retracement level is highly possible. If you’re feeling courageous, this could be a good counter-trend setup!
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. Check him out, playas!