Take a look at these short-term reversal signals on Cable! After breaking below that ascending trend line connecting the lows of recent forex price action, the pair formed a head and shoulders pattern on its 1-hour time frame. GBP/USD has yet to break below the neckline of the formation before confirming the potential downtrend, which might last by as much as 200 pips. Stochastic is moving out of the oversold region though, with a slight bullish divergence, and indicating that bulls are in control for now.
Is GBP/JPY ready to make a break for it? The consolidation inside the ascending triangle pattern on the 4-hour time frame has been getting tighter and tighter, which means that the battle between the bears and the bulls is heating up! Today’s set of top-tier events from the U.K. should push this pair in a clearer direction, but it appears that the odds are tilted to the downside as stochastic is crawling down from the overbought zone. Whichever way this goes, make sure you have your stops ready for some crazy volatility!
Anybody in the mood for a countertrend swing trade? EUR/GBP has been trading inside a descending trend channel for quite some time already and has been selling off for the past couple of months. However, stochastic is indicating oversold conditions, which suggests that selling pressure is winding down. The pair could find support at the bottom of the channel near the .8100 major psychological level and make a quick bounce. Of course a downside break is also possible since the selloff has been pretty strong lately!
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.