Let’s start off with a simple retracement play on AUD/USD’s 1-hour time frame. As you can see from the chart above, the pair recently broke below support at the .8600 major psychological level and dipped below the .8500 mark. Price pulled back up to the broken support zone, which lines up with the 38.2% Fibonacci retracement level and might hold as resistance. After all, stochastic is already making its way down from the overbought area, indicating that Aussie bears are in control of price action for now. Enough selling pressure could take price down to its previous lows or even lower!
Check out this ascending triangle pattern on USD/CHF’s 1-hour forex chart! The pair is currently testing the triangle support around the .9600 major psychological mark and may be due for a bounce back to the top at .9700. Stochastic is already indicating oversold conditions anyway, which means that dollar bears are tired and that bulls might take over. However, a downside break is still possible if bears don’t give in so easily and this might take USD/CHF lower by as much as 300 pips, which is the same height as the chart pattern. Make sure you review our lesson on How to Trade Triangle Patterns if you wanna play this one!
Higher lows and lower highs? Why, that’s a symmetrical triangle forex pattern right there! CAD/JPY has been consolidating inside this formation for the past few days, with price testing the bottom of the triangle at the moment. Stochastic is still reflecting a buildup in selling pressure, which could mean a potential downside break. In that case, CAD/JPY could head south by as much as 150 pips, which is roughly the same height as the chart pattern. A bounce could take the pair back to the top of the triangle around the 104.75 area or possibly trigger a breakout to the upside. If you wanna catch a breakout in either direction, a straddle setup can be an option!
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.