“It’s going down. I’m yelling timber!” This Ke$sha song has been on loop for AUD/NZD for almost the entire month, as the pair has been trading below the falling trend line on the 1-hour time frame. It just bounced off the resistance level last week but looks ready to make another test sooner or later. Stochastic is still climbing, which suggests that Aussie bulls could push the pair back up to the trend line. Make sure you wait for the oscillator to indicate overbought conditions before shorting and set your stop outside the trend line!
If you’re a fan of combining Fibs with support and resistance, then this setup is just for you! AUD/JPY has recently broken below a support area somewhere around the 94.50 minor psychological level, before dipping to the 93.00 mark. Price made a sudden upward spike earlier in the week then found resistance at the 50% Fib. It seems that another test of resistance could be in the cards though, as price and stochastic are both climbing again. Reversal candlesticks at the 94.50 level could be a sign that the pair would head back south.
Not in the mood to short the Aussie? Here’s a setup that could let you go long instead. EUR/AUD just finished testing the falling trend line on its 1-hour forex time frame while stochastic is pointing down, suggesting that the pair is ready to resume its drop. A selloff could last until the previous low at 1.4565 or even make new ones if euro bears are feeling aggressive. A strong break above the trend line could mean that the downtrend is over and that a long-term reversal might take place, so just be ready to switch sides if that happens!
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.