Heads up, pound bulls! If you’re long GBP/CHF, you should watch out for a possible pullback as price is currently testing the top of the rising channel on the 1-hour forex time frame. At the same time, stochastic is moving down from the overbought area, indicating that bears are getting stronger. In that case, price might retreat to the middle of the channel near the 1.5300-1.5350 psychological levels or all the way back down to the channel support at 1.5250.
Aha, it’s my favorite break-and-retest scenario playing out on EUR/NZD! The pair has made a strong selloff at the start of the month but has found support above 1.5400 and pulled back up for a correction. Using the handy-dandy Fib tool on the latest swing high and low on the 4-hour chart reveals that the 61.8% Fibonacci retracement level lines up with a broken support area at the 1.5550 minor psychological mark. Stochastic is heading down from the overbought zone, which means that sellers are ready to hop in yet it appears that buyers won’t give in too easily!
Looking for a longer-term setup on a pound pair? You gotta check out this rising channel formation on GBP/AUD’s 4-hour forex time frame! Price has slowly been crawling higher and has recently found resistance at the top of the channel near the 1.8400 major psychological handle. Stochastic is indicating overbought conditions, which means that bears might be in control of price action later on. If so, GBP/AUD might have trouble sustaining its climb past the channel resistance and 1.8400 area and might retreat to the mid-channel area of interest.
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.