Major correction in the works? USD/CHF seems to be very exhausted from its recent dive, as the pair has pulled up sharply in the past few days. It could be on its way to test the former support level at the .9200 major psychological handle. This also happens to be right in between the 50% and 61.8% Fib levels! Be careful though, as stochastic hasn’t quite reached the overbought region yet, which means that dollar bulls are still in control for now.
If you think that USD/CAD is about to head back north, then here’s a setup that’s hinting at a potential bounce! USD/CAD has retreated from its recent highs and has pulled back to the 1.0400 major psychological level. This coincides with the 38.2% Fibonacci retracement level and the previous month’s highs, which suggests that it could act as strong support. Stochastic is turning from the oversold area so buyers could get back in the game pretty soon.
Short-term traders out there might find this retracement setup on EUR/JPY’s 1-hour time frame more to their liking! This pair has been consolidating for quite some time though, as euro bulls and bears refuse to give way. An upside break could lead to a rally, but this might be limited to the 38.2% Fib and former support area. Take note that stochastic is pointing down, suggesting that the selloff could resume sooner or later.
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.