After bouncing off the 1.1800 area, EUR/USD finally looks ready to make a correction. Using the handy-dandy Fib tool on the latest swing high and low on the 4-hour forex chart reveals that the 61.8% Fibonacci retracement level lines up with an area of interest. This could act as resistance if the pair makes a large correction while a shallow one might last only until the 38.2% Fib. After all, stochastic has already reached the overbought area, which means that buyers are already feeling exhausted and that sellers might hop in soon.
Now here’s a look at USD/CHF’s 4-hour forex chart, which is basically a flipped version of the EUR/USD chart I showed y’all earlier. Price seems to be retreating from its current rally after finding resistance at the 1.0200 major psychological handle. A large retracement could be underway, with the 61.8% Fibonacci level lining up with a resistance-turned-support area. In addition, a bullish divergence has formed, as price made higher lows while stochastic drew lower lows. This could be a sign that buyers are hoping to push the pair back up soon!
Last but not least is GBP/USD’s 4-hour forex chart, which is also showing a pretty neat retracement setup. As you can see, price appears to be pulling up from its recent dive and it might be a good opportunity to combine Fibs with inflection points. In particular, the 61.8% Fibonacci retracement level lines up with a broken support area around the 1.5500 major psychological mark and might act as resistance. Stochastic is already indicating overbought conditions, which hints that pound bears might take control of price action soon and push for new lows.
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.