Divergence alert! On its 4-hour forex time frame, AUD/NZD formed higher lows while stochastic made lower lows, creating a bullish divergence and signaling a potential bounce. At the same time, the pair appears to be finding support from the ascending trend line connecting the recent lows on the same time frame. If the uptrend stays intact, price could climb back to the previous highs near the 1.0900 major psychological level or perhaps create new ones. However, if Aussie bears come out to play, a downside break from the trend line might happen and lead to a longer-term selloff for AUD/NZD.
Watch out, euro bulls! EUR/CAD is currently hitting the ceiling on the rising channel forming on its 1-hour forex chart and may be forced to head back down soon. Stochastic is already moving out of the overbought zone, confirming that sellers are taking control of price action. In this case, the pair could drop back to the bottom of the channel near the 1.3500 major psychological support or at least until the mid-channel area of interest at 1.3600. If buyers refuse to give way though, the pair could still have a shot at breaking past the channel resistance at the 1.3800 handle.
Here’s another potential channel play on a euro pair. EUR/JPY is also trading inside a rising channel on its 1-hour forex chart, indicating that a short-term uptrend is underway. The pair seems to have set its sights on the channel resistance around the 137.00 to 137.50 area and could keep climbing until the top of the range. Stochastic is already indicating overbought conditions, which means that buyers need to take a break soon. If the top of the channel keeps gains in check, EUR/JPY might slide back to the channel support around the 135.50 minor psychological support.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.
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