Time for a pullback on EUR/CHF? The pair has been in a pretty steady uptrend but is showing signs of a correction on its 4-hour forex time frame. Using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the rising trend line connecting the recent lows. In addition, this coincides with the 1.0700 major psychological level which might hold as strong support. A bullish divergence has formed, with stochastic making lower lows and price drawing higher lows, indicating that a bounce is in order. The 100 SMA is above the 200 SMA anyway so there’s a good chance that the rally could resume. Watch out for a potential bounce around the 50% Fib or 100 SMA as well!
Here’s another potential trend play on a euro pair! EUR/CAD has been moving inside its rising channel visible on the 1-hour forex chart for nearly a couple of months already, and the pair is currently testing support around the 1.4400 major psychological level. Stochastic is already indicating oversold conditions, which means that sellers are exhausted and that buyers might be ready to take over. In that case, price could bounce back to the top of the range at the 1.4750 minor psychological resistance. The 100 SMA is above the 200 SMA for now, confirming that the path of least resistance is to the upside. If you’re hoping to catch a reversal, better wait for a long red candle to close below the channel support before hopping in a short position.
Pound bulls, watch out! GBP/JPY is currently testing the top of its rising wedge on the 1-hour forex time frame and may be due to head south soon. Stochastic is already moving down from the overbought area, suggesting that selling momentum is picking up and that the pair could head back to the wedge support around the 193.50 to 194.00 levels. If you’re shorting at market, make sure you set your stop past the wedge resistance or the 195.50 minor psychological mark. Take note, however, that the 100 SMA is above the 200 SMA for now so an upside break might still be possible. If that happens, the pair could climb by an additional 400 pips or the same height as the wedge formation.
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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.