Think the trend is your friend with this setup on Cable? As I showed y’all a few days back, the pair actually made a strong break below the 1.5000 major psychological level which hasn’t been broken in ages! Price already made a retest of the broken support area and appears to be forming a descending trend line on its 1-hour forex chart. It seems to be gearing up for another test of the resistance area now, as stochastic is making its way out of the oversold region. Using the handy-dandy Fib tool on the latest swing high and low reveals that the 1.4950 minor psychological level lines up with the retracement levels and the trend line, which might keep gains in check.
Now here’s a simple break-and-retest setup on AUD/USD’s 4-hour forex chart. After breaking below the support around the .7750 minor psychological level, the pair moved all the way down to the .7600 handle then bounced back up. Throwin’ on the Fibs on the latest drop shows that the 50% retracement level lines up with the broken support and may hold as resistance. Stochastic is already indicating overbought conditions and may head lower, which suggests that AUD/USD could resume its dive pretty soon. In that case, price could head back to the previous lows near .7600 or perhaps create new ones. Better set those stops above the highest Fib if you’re thinking of shorting!
Can’t get enough of those break-and-retest plays? Well, here’s another one on NZD/USD’s 4-hour forex chart! This pair also made a strong break below a support level recently and made its way down to the .7200 major psychological support. From there, NZD/USD staged a strong rally and climbed all the way back up to the area of interest at the .7450 minor psychological level. Those candlestick formations around the 50% to 61.8% Fib levels reflect a bit of hesitation among buyers, which means that a selloff might be in order. Stochastic is already turning lower from the overbought area, confirming the potential drop which might last until the previous lows or lower.
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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.