Confluence, baby! A bunch of technical signals are lining up for a potential bounce by EUR/CAD from its rising trend line on the 4-hour forex time frame. This support area lines up with the 200 SMA, the 61.8% Fibonacci retracement level and a former resistance zone. The short-term 100 SMA is still moving above the 200 SMA anyway, which means that the uptrend might stay intact. Stochastic is pointing down but is nearing the oversold region, which might draw buyers back in. If you’re looking for more confirmation, wait for reversal candlesticks to form at the trend line or the 1.3700 handle before going long.
If you’d rather trade the Aussie against the euro instead of the Loonie, then here’s a very similar setup on EUR/AUD’s 4-hour forex chart. The pair is still in the middle of its correction and might still have a few more pips to go before testing the potential support at the rising trend line. This coincides with the 61.8% Fibonacci retracement level, 200 SMA, a former resistance zone, and the 1.4250 minor psychological support level. Stochastic is on its way down, indicating that euro bears are in control at the moment. A bounce from this area could lead to another rally up to the previous highs at 1.4750 or beyond.
If you’d rather stick to playing the ranges, then you might like this setup on EUR/GBP’s 4-hour forex chart much better. Price has been bouncing back and forth between support around the .7100 to .7150 area and resistance near the .7400 major psychological mark. At the moment, the pair is closing in on the range support and might be due for a bounce. Stochastic is already indicating oversold conditions, which means that euro bulls might start charging really soon. If that happens, the pair could head back to the top of the range. Just watch out for a long red candle closing below the range support because it might mean that a breakdown is taking place!
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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.