Let’s start off with a simple break-and-retest play on NZD/USD’s 1-hour forex chart. The pair just broke below the .7500 major psychological support then dipped to a low of .7423 before pulling back up. Using the handy-dandy Fib tool on the latest swing high and low shows that the 61.8% Fibonacci retracement level lines up with the broken support at .7500 and may hold as resistance. Stochastic is already indicating overbought conditions, which means that Kiwi bears might hop in soon and push price back down to its recent lows.
Next up is this neat rising wedge forming on AUD/JPY’s 1-hour forex chart. The pair has just bounced off the bottom of the chart pattern and is on its way to test the top around the 93.50 minor psychological resistance. Stochastic looks ready to head south from the overbought area, which means that price could move south as well and probably test support at the 93.00 major psychological level. If sellers are strong enough, they could even push for a downside break and spark a 200-pip selloff, which is the same height as the formation.
Last but most definitely not least is this range setup on AUD/USD’s 1-hour forex time frame. The pair has been bouncing off support at the .7750 minor psychological level and resistance at the .7850 mark for the past few days, creating a 100-pip range. At the moment, price is testing the top while stochastic is giving the overbought signal, hinting that another move lower is possible. However, if Aussie bulls refuse to give up, an upside break from resistance might take place and lead to more gains for the pair. Better review our lesson on How to Trade Breakouts if you’re taking that route!
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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.