First up is this potential swing trade on CAD/JPY’s daily forex chart. The pair recently broke below support around the 94.00 major psychological level then dipped to a low of 87.45 before pulling up. Using the Fib tool on the latest swing high and low shows that the 50% Fibonacci retracement level is right smack in line with the broken support, which might now hold as resistance from now on. In that case, a move back towards the previous lows might be seen. Note that the 100 SMA is below the 200 SMA, which confirms that further losses are possible, but an upside break past the 61.8% Fib could spur a move back up to the swing high at 101.15.
Breakdown alert! After moving inside a range for the past few months, AUD/CAD finally broke out in the southbound direction. This could mean that the pair is in for further declines, possibly by around 300 pips or the same height as the rectangle forex formation. However, stochastic is already indicating oversold conditions, which means that sellers are already feeling exhausted. A pullback to the broken support area around the .9430 level might take place before price heads much lower, but a move back above the range support could suggest that the breakdown was a fake out. Better review our lesson on How to Fade the Breakout if you’re looking to trade this one!
Hoping to ride an ongoing trend? Or waiting for a countertrend setup? Either way, you might wanna keep close tabs on this ascending channel formation visible on GBP/NZD’s 4-hour forex chart. The pair just bounced off the mid-channel area of interest and might be ready to test the resistance around the 2.4450 minor psychological mark. Stochastic is almost in the overbought zone and is starting to turn down, indicating that sellers might take control of price action and push the pair back to the support. If you’d like to go with the flow, better wait for an actual test of the channel support around the 2.3700 major psychological level. The 100 SMA is above the 200 SMA anyway so the uptrend is likely to carry on.
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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.