Will the euro resume its slide soon? EUR/USD has recently pulled up from the 1.2500 area to a high of 1.2675, testing the falling trend line on its 1-hour forex time frame. To top it off, a bearish divergence has formed, with stochastic making higher highs and price making lower highs. If the trend line holds as resistance, EUR/USD could make its way back down to its previous lows around 1.2500 or perhaps create new ones. However, if the pair makes an upside break from the falling trend line, it could be a sign that a reversal is taking place.
Now here’s a flipped version of the previous chart on USD/CHF’s 1-hour forex time frame! Price has been climbing steadily, creating a rising trend line connecting the recent lows. After a strong rally, the pair has pulled back to this trend line, which happens to line up with the 100 simple moving average. This indicator has held as a dynamic support area in the past and might continue to do so, as a bullish divergence can also be seen on the same chart. If so, USD/CHF could climb back up to its latest highs near the .9700 mark. Make sure you set your stop below the 200 SMA if you’re planning to go long!
Time for a reversal on AUD/USD? The pair has formed a double bottom forex chart pattern on its 1-hour time frame, suggesting that the downtrend is about to turn. Price has yet to test the neckline at the .8800 major psychological level and break above it before confirming the reversal. Take note that stochastic is indicating a pickup in selling pressure, which means that price might need to pull back a bit for now. If the neckline holds as strong resistance, AUD/USD could even fall to its previous lows around .8650 and make another bottom.
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.