Let’s start off with this textbook break-and-retest play on Cable’s 4-hour forex time frame. The pair recently broke past the resistance at the 1.5650 minor psychological level then zoomed up to 1.5830 before retreating. Using the handy-dandy Fib tool on the latest swing low and high shows that the broken resistance is somewhere between the 38.2% and 50% retracement levels, which might hold as support. Stochastic is still on the move down so larger pullback might last until the 61.8% Fib, which is close to the 200 SMA. Note that the 100 SMA is above the 200 SMA, suggesting that there’s enough bullish momentum to lead to another test of the previous highs.
Aha! Looks like this AUD/CAD range is still holdin’ up! The pair made a large spike down then bounced off the bottom of the range around the .9430 level, but it looks like another test of support might take place. If it continues to keep losses in check, a move back to the top of the range near the .9700 major psychological resistance might take place. The 100 SMA is treading above the 200 SMA for now, which means that a rally is possible. However, stochastic is currently on middle ground and barely offering any good clues at the moment. If you think it’s about time for a breakout, make sure you review our lesson on How to Trade Breakouts before setting your orders!
Here’s another potential forex play on an Aussie pair! AUD/NZD has been moving inside a descending channel on its 4-hour chart and may be headed back towards the bottom around the 1.0700 major psychological level. Technical indicators are suggesting that a bounce might happen sooner or later since stochastic is trying to climb out of the oversold zone while the 100 SMA is moving above the longer-term 200 SMA. If you’re in the mood for a countertrend trade, you could wait for reversal candlesticks to form around the channel support before going long. But if you’re bearish on this pair, you could hold out for a test of the resistance around the 1.1100 major psychological mark.
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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.