Kiwi bears, watch out! NZD/USD’s drop might come to a halt since the pair has already reached the bottom of the ascending forex trend channel on its 1-hour time frame. Stochastic is indicating oversold conditions, which means that sellers might start to take it easy from here. If buyers take over, the pair could climb back to the top of the channel near the .8050 minor psychological resistance or at least until the middle of the channel at .7950. However, if selling pressure remains strong, a downside break is still possible and might be a sign that longer-term losses are in the cards.
If you’re looking for a trend play, it ain’t too late to hop in this potential short trade on GBP/AUD. The pair has been moving inside a descending forex channel since the start of the month and appears to be showing downside momentum after recently testing the top of the channel. Stochastic is still moving higher though, which suggests that another test of resistance around 1.8300 might take place. If the downtrend carries on, GBP/AUD could make its way down to the bottom of the channel near the 1.8000 major psychological support. Make sure you stop above the channel resistance if you plan to short this one!
CAD/JPY still seems to be in correction mode, as the pair is slowly pulling up from its recent dive. At the moment, the 38.2% Fibonacci retracement level appears to be holding as resistance, but a higher pullback could still be possible. As you can see from the forex chart above, the 50% Fibonacci level lines up with a former support area and the 96.50 minor psychological resistance. Stochastic is starting to move down from the overbought area though, which means that Loonie bears are ready to take control of price action. If the selloff resumes, CAD/JPY could head back to its previous lows near 93.00 or make new ones.
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.