Don’t look now, but GBP/CAD is making a break for it! The pair has just breached support at the rising trend channel on its 4-hour forex time frame, hinting that the recent uptrend is about to turn. Stochastic is still heading south, which means that pound bears are in control of price action for now and are ready to push GBP/CAD much lower. Once the oscillator crosses up from the oversold region, a quick pullback to the broken support area might take place and offer a better price to enter a potential short trade. Just make sure you review our lesson on Avoiding Fakeouts!
If you think the trend is your friend, you might wanna put this potential USD/CAD long setup on your watch list. As you can see on its 4-hour forex time frame, the pair has been bouncing off a rising trend line for the past few months and may be ready to make another test of support soon. Stochastic is starting to make its way out of the oversold region already, indicating that dollar bulls are ready to charge and push USD/CAD back up to its previous highs and beyond. In addition, the 100 and 200 simple moving averages might also hold as near term support for the pair around the 1.1200-1.1250 levels.
And now for my favorite break-and-retest situation! AUD/CAD recently broke below a shallow rising trend line support on its 4-hour forex chart and is pulling up for a retest. Using the handy-dandy Fib tool shows that the 50% Fibonacci level lines up with the broken trend line and is close to the .9850 minor psychological level, which might hold as resistance. Stochastic is indicating overbought conditions anyway so sellers might jump in sooner or later and push AUD/CAD back to its previous lows around .9750 or lower. If you’re planning on shorting this one, make sure you set your stop past the 61.8% Fib or .9900 handle.
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.