Anybody gutsy enough to take a countertrend forex setup? You might wanna look at this ascending channel on GBP/AUD’s 1-hour time frame because the pair is just about to test the resistance! Price is nearing the 2.1400 major psychological level, which might keep further gains in check and send the pair back down to the bottom of the channel around the 2.1100 mark. Stochastic is indicating overbought conditions so pound bulls might need to take a break and let sellers take over. The 100 SMA is still above the 200 SMA, though, which means that the uptrend could stay intact and that an upside break might be possible. If you’re hoping to catch the long-term trend at a better price, you could still wait for a bounce off the middle of the channel or the bottom.
Reversal alert! AUD/NZD just formed a double top on its 4-hour forex chart, hinting that the uptrend is already over and that a selloff is bound to take place. The pair is currently testing the neckline of the formation around the 1.1050 minor psychological level and might be due for a downside break, although stochastic is already in the oversold region. A bounce could lead to a move up to the previous highs around the 1.1400 major psychological resistance while a downside break could spur a 300-pip downtrend, which is roughly the same height as the chart formation. Note that the 100 SMA just crossed below the longer-term 200 SMA, which means that a reversal is in order.
Here’s a simple break-and-retest setup on USD/CAD’s 1-hour forex chart. The pair recently surged past the 1.3015 barrier then climbed all the way up to a high of 1.3103 before pulling back. Using the handy-dandy Fib tool on the latest swing low and high shows that the 38.2% Fibonacci retracement level lines up with the broken resistance. If this holds as support, price could bounce back to the previous highs and beyond. However, if a larger pullback takes place, USD/CAD could retreat until the 61.8% Fibonacci retracement level, which is close to a short-term rising trend line and the 100 SMA. Stochastic hasn’t quite reached the oversold area yet so sellers might still be in control and a move towards the trend line and 1.3000 major psychological support could take 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.