EUR/GBP sure knows how to drop it like it’s hot! The pair has been on a steady downtrend since August last year, forming a descending channel on its daily chart. It just bounced off the bottom of the channel earlier this month and appears ready to test the top, as stochastic is crawling out of the oversold zone. A rally could last until the .8350 minor psychological level, which is right around the channel resistance.
Divergence alert! On its daily time frame, EUR/AUD has formed higher highs but stochastic has drawn lower highs, creating a regular bearish divergence. If the divergence plays out, the selloff might last all the way down to the next support level around the 1.4200 major psychological handle. Make sure you look at the 9 Rules for Trading Divergences if you’re planning to short!
Last but not least is another channel formation, this time an ascending one on GBP/CHF. The pair has been on a strong uptrend since the middle of 2013 and seems intent on keeping it that way. It sold off upon hitting resistance at the top of the channel but another bounce might be in the cards if support around the bottom of the channel or the 1.4500 major psychological level holds. Wait for stochastic to reach the oversold zone before going long 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.