Let’s start off with my all-time favorite break-and-retest situation! As you can see on AUD/NZD’s 1-hour forex chart, the pair appears to be running out of steam with its northbound move, suggesting that a quick pullback might take place. Using the handy-dandy Fib tool shows that the 50% level lines up with the 100 SMA, which also coincides with a former resistance area. A bounce from that potential support zone near the 1.0900 major psychological level could lead to a test of the previous highs.
In the mood for scalp trades? Then you might wanna keep your eyes glued to this tight falling channel on GBP/AUD’s 1-hour forex chart. The pair has been slowly edging lower, bouncing off the channel support and resistance since the start of the month. If you think the channel could continue to hold, you could short at the top or go long at the bottom to catch the bounces. On the other hand, if you think that a breakout is due, you could set entry orders outside the falling channel. Make sure you review our lesson on Trading Breakouts first!
If you dig long-term setups, then you should probably keep your eyes glued on this one. AUD/CHF has formed a rising wedge on its daily forex chart, with the consolidation getting tighter in the past few weeks. This could be a sign that a breakout in either direction is in the cards. Stochastic isn’t offering any clear clues at the moment since it is on middle ground, but it appears to be on its way down. A strong break below the .8200 handle could mean more losses for AUD/CHF while a convincing rally past .8500 could be the start of a longer-term rally.
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.