Let’s start off with my all-time favorite break-and-retest setup! EUR/USD seems to be in the middle of a retracement for now, as price dipped to the 1.2375 area then climbed right back up to test a broken support zone. This might hold as resistance since it lines up with the 38.2% Fibonacci retracement level and stochastic is already indicating overbought conditions. In fact, I’m seeing a shallow bearish divergence right there! A selloff from this point could lead to a drop back to the previous lows or perhaps new ones.
Think the trend is your friend? Better keep your eyes glued to this GBP/USD descending trend line then! The pair seems to be hesitating on the recent drop and may be due for a quick pullback to the falling resistance zone. This lines up with the 100 SMA, which has held as a dynamic resistance area as well. Stochastic is still moving up anyway so there’s enough buying pressure to take GBP/USD up to the 1.5700 to 1.5750 area around the descending trend line. Once the selloff resumes, GBP/USD could fall beyond its previous lows near the 1.5550 minor psychological mark.
If you’d rather trade ranges, then this one on USD/CHF’s 1-hour forex chart is definitely worth watching. The pair just came off a test of resistance around the .9725 level and might be headed back to the bottom around .9575. Take note though that stochastic is already indicating oversold conditions, which means that sellers are exhausted and buyers might take control of price action soon. After all, there appears to be an area of interest around the middle of the channel and this might hold as short-term support. In that case, USD/CHF might make another rally back to the range resistance.
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.