Will it be a bounce or a break? After bouncing from the bottom of the rising channel around 1.0200, AUD/USD is now sitting right at the top of the channel close to the 1.0500 handle. Although the uptrend seems to be strong, stochastic is already in the overbought zone, hinting that Aussie bulls could use a break. If AUD/USD is unable to sustain its upward momentum, it could head back south and test the bottom of the channel again!
Check out that neat little spinning top on USD/CHF’s daily time frame! According to the School of Pipsology, this means that bulls and bears have a little tug-o-war going on. The bulls might have a bit more leverage this time since USD/CHF is finding support around the .9800 mark, which acted as former resistance and is also the 38.2% Fibonacci retracement level. However, stochastic has yet to make its way to the oversold region, suggesting that dollar bears have enough energy to take the pair lower.
Here’s another channel for all you trend-lovers out there! GBP/JPY has been crawling inside a falling channel for more than an entire month already but is currently testing the top. Stochastic, which is already in the overbought area, seems to suggest that a downward move might be in the cards but the recent rally looks strong enough to breach the channel resistance. If you’re planning to play the range, make sure you set your stops above the falling channel. Good luck!
Before you get carried away with all these chart patterns, remember that technical analysis is only half the story.
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.