Here’s another dollar pair set to follow yesterday’s break-and-retest forex setups! GBP/USD has just broken below the 1.6000 major psychological handle but is pulling up for a quick retest. The 38.2% Fibonacci retracement level appears to be holding as resistance, as it lines up with the broken support zone and stochastic is already indicating overbought conditions. A pickup in selling momentum could mean that GBP/USD is southbound once more, possibly until the previous lows at the 1.5900 major psychological support or lower.
Bounce or break? GBP/CAD is currently testing the top of its range on the 4-hour forex chart, still deciding which way to go next. Stochastic is suggesting that pound bears are ready to return, as the oscillator is starting to move down from the overbought region. In that case, GBP/CAD might fall back to the bottom of the range around the 1.7875 area or at least until the middle at 1.8000. On the other hand, a convincing upside break past the 1.8200 resistance could mean that more gains are in the cards for the pair. Make sure you review our lesson on Trading Breakouts if you’re bullish on this one!
Divergence alert! AUD/NZD has been forming an ascending triangle pattern on its 4-hour forex chart and is currently testing the bottom. At the same time, a bullish divergence has formed, with stochastic making lower lows and price drawing higher lows. With that, a bounce could take place and push the pair back to the triangle resistance around the 1.1280 level. Stochastic has yet to climb out of the oversold area before reflecting a return in buying pressure, which means that price might still consolidate or dip lower. Better check if the setup meets the 9 Rules for Trading Divergences first!
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.