Reversal alert! EUR/AUD just broke below the neckline of its double top pattern on the 1-hour forex time frame, signaling that the previous downtrend is about to turn. Note that the chart formation is approximately 300 pips tall, which means that the resulting selloff could last by 300 pips as well and take the pair down to the 1.4100 major psychological support. Be careful since stochastic is indicating oversold conditions so sellers might be feeling a bit exhausted and allow a pullback to the broken neckline to take place. If you’re holding out for additional confirmation, you could wait for the 100 SMA to cross below the longer-term 200 SMA before hopping in.
Aussie bulls, huddle up! AUD/USD just bounced off the bottom of its ascending channel on the 1-hour forex chart and could be headed back to the top. The short-term 100 SMA is cruising above the 200 SMA anyway, confirming that the uptrend could carry on. Price could rally until the top of the channel around the .7875 level or at least until the mid-channel area of interest at the .7800 major psychological mark while stochastic is still heading north. Once the oscillator starts turning down from the overbought area, the pair might head back down and test the channel support around the .7700 major psychological level.
Last but not least is this simple trend play showing up on GBP/AUD’s 1-hour forex chart. A rising trend line can be drawn to connect the recent lows of price action since the start of the month, and it looks like the pair is ready to test this support area once more. The trend line coincides with the 200 SMA, which has acted as a dynamic support level in the past and may continue to keep losses at bay. At the same time, stochastic is starting to climb out of the oversold area, suggesting that pound bulls could start charging once more. In that case, price could revisit its previous highs at the 2.0550 minor psychological mark or even make new ones. A downside break, on the other hand, could mark the start of a reversal.
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