Watch out, pound bulls! GBP/USD just broke below the ascending trend line connecting the lows on the 4-hour forex chart, indicating that a reversal might take place. If so, the pair could move south until the next area of interest around the 1.5000 major psychological level or all the way down to those lows at 1.4500. However, if this all just proves to be a fakeout, GBP/USD could still resume its climb and possibly surge past the previous highs at the 1.5800 major psychological level. Stochastic is already in the oversold area but hasn’t crossed up yet, which means that sellers might still be in control.
If you’re looking to short the euro, this might be your chance! EUR/JPY has just formed a head and shoulders pattern on its 4-hour forex chart, hinting that a downtrend might be underway. Price is already starting to break below the formation’s neckline at the 134.00 major psychological level and might be in for around 300 pips in losses, which is roughly the same height as the chart pattern. Stochastic is pointing down, confirming that euro bears have enough energy to push for a selloff, but the oscillator looks ready to make an upward crossover and draw the bulls back in play. Better review our lesson on How to Trade Head and Shoulders Patterns if you’re planning on shorting this one.
How low can the Kiwi go? NZD/USD has been selling off for the past few days and may be in for more declines, as the pair seems to be drawn towards the bottom of its long-term forex range. Looking at the pair’s daily time frame shows that there’s a major support level at the .7200 mark, which has kept losses in check so far this year. If this continues to hold as a floor, price could bounce back up to the top of the range at the .7650 minor psychological mark or at least until the middle at .7450. Stochastic is already indicating oversold conditions, which suggests that a rally is possible, but keep your eyes peeled for a potential breakdown, too!
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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.