Check out this neat little pullback on EUR/GBP’s 4-hour forex chart! The pair is testing the falling trend line connecting the highs since mid-March and is also finding resistance at the 100 SMA. Stochastic is headed lower, suggesting that euro bears are still in control of price action at the moment and that EUR/GBP might be on its way to test its previous lows below the .8100 mark. Stronger selling pressure could even push the pair to make new lows!
Are my eyes deceiving me or is that a hidden bullish divergence I see? GBP/CHF is trading above the rising trend line connecting the lows on its 4-hour chart, indicating that the uptrend is still intact. At the moment, price is finding support at the 100 SMA, which is a few pips above the rising trend line support. Unless pound bulls charge right away, GBP/CHF might have a chance to bounce off the trend line before resuming its climb. Just make sure you set your stop below the 200 SMA if you’re planning to go long.
Here’s another potential divergence play! GBP/CAD seems to be forming a falling channel on its 4-hour forex chart, with price gearing up to test the bottom. At the same time, a bullish divergence has formed, suggesting that a bounce could happen sooner or later. In that case, GBP/CAD might make its way back to the top of the channel or at least until the middle around the 1.8250 minor psychological level. Make sure you check if this setup meets the 9 Rules for Trading Divergences first before hopping in!
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.