Anyone in for a reversal? NZD/USD seems to be forming a head and shoulders pattern on its 1-hour chart and could be ready to break down. Price found resistance at the 61.8% Fibonacci retracement level and just formed the right shoulder of the reversal pattern. From what I recall in the chart patterns lesson of the School of Pipsology, the breakdown is usually the same size as the height of the formation, which is roughly 200 pips in this case. I’d keep a close eye on that neckline around .7850 if I were you!
Time to go down under, mate! AUD/USD’s rally could be over now that stochastic is already in the overbought zone. On top of that, support turned resistance at the 1.0250 level, which coincides with the 61.8% Fib level, seems to be holding. With that, the pair could be in for a big drop, possibly back to parity or even until its former lows near .9400. But if Aussie bulls refuse to give way, they could still push the pair to the next area of interest around 1.0500.
Now here’s a possible long-term retracement play on USD/CAD. The pair seems to be finding support at the 61.8% Fibonacci retracement level on the daily chart, as Loonie bears are putting up a good fight against the bulls. But who will claim victory? That bullish divergence, with the price forming higher lows and stochastic making lower lows, suggests that Loonie bears could soon have the upper hand. I’d take a quick peek at the 9 Rules for Trading Divergences first before jumping in though!
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.