Bounce or break? EUR/JPY is nearing the top of its range on the 1-hour forex time frame, ready to put the resistance level to the test. If it holds like a boss and keeps gains in check, the pair could head back to the bottom of the range around 139.25. Stochastic is in the overbought region already anyway, which means that buyers are running out of steam and might let the sellers take over. An upside breakout could be possible if euro bulls keep charging, possibly taking the pair up by an additional 150 pips or the same height as the rectangle pattern. Better review our lesson on How to Trade Breakouts if you’re hoping to catch EUR/JPY bust out of its range!
Will the bottom of the range hold as support for AUD/CAD? The pair has been pacing back and forth between support at the .9450 minor psychological mark and resistance at the .9700 major psychological handle for the past few weeks. It looks like the range support is doing a good job at keeping further losses at bay, although I wouldn’t dismiss the possibility of a downside break just yet. Stochastic is on middle ground and barely offering any clear clues at the moment, which means that this could go either way. If you’re looking to catch a bounce off this support area, make sure you swing by our lesson on Identifying Range-Bound Markets and set your stop losses properly.
Last but definitely not least is another potential range play on GBP/AUD’s 1-hour forex chart. The pair is currently testing the top of the range around the 2.0050 minor psychological resistance level and seems to be making a breakout attempt. If that pushes through, the pair could climb by roughly 200 more pips, which is the same size as the current range. But if the resistance holds, the pair could head back south towards support at the 1.9850 minor psychological level. Stochastic is indicating overbought conditions, favoring a potential downside move. If you need more confirmation, you could wait for reversal candlesticks before taking a short trade.
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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.