What’d I tell y’all about forex gaps getting filled? As I mentioned yesterday, EUR/GBP recently broke below a major support area at the .7100 handle and dipped to lows not seen in nearly a decade. The pair then pulled back up to the broken support area, which seems to be holding as resistance for now. Stochastic is still on the move up, suggesting that a higher retracement might be possible, probably until the 50% Fibonacci level and the moving averages. The short-term 100 SMA has yet to cross below the longer-term 200 SMA to confirm that a selloff is likely.
If you’re in the mood for a simple consolidation play, then you might like this symmetrical triangle setup forming on USD/CAD’s 4-hour forex time frame. The pair is currently testing the triangle resistance near the 1.2400 major psychological level, which might keep further gains in check. If so, price could head back down to the triangle support near the 1.2150 to 1.2200 area. The 100 SMA looks ready to cross below the 200 SMA, which could confirm that the pair would move south, but stochastic is still moving higher and indicating that buyers are in control. A triangle upside breakout could lead to around 800 pips in gains, which is the same height as the chart formation.
Here’s another potential break-and-retest play you might wanna look at. USD/CHF recently surged past its descending trend line resistance on the 1-hour forex chart, hinting that the short-term downtrend is already over. From there, price zoomed up to a high of .9428 before retreating close to the broken trend line. The pair appears to be finding support at the 61.8% Fibonacci retracement level while stochastic is indicating oversold conditions, which means that the rally could resume. The 100 SMA is still above the 200 SMA anyway so the uptrend could stay intact. In that case, USD/CHF could move back up to the previous highs and beyond!
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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.