If there’s one thing I like about USD/CAD, it’s that it usually moves in ranges! The pair is currently trapped inside a 150-pip forex range at the moment, pacing back and forth between support around the 1.3160 level and resistance at 1.3310. Price just got rejected on its latest test of resistance and is now on its way to test support. A bounce might take place at the bottom of the range since stochastic is already starting to move out of the oversold region, hinting that buyers are taking control of price action. In that case, another test of the resistance might take place. On the other hand, a break below support could put USD/CAD back in its previous range with support near the 1.3000 mark.
Check out this AUD/JPY pullback situation that Cyclopip’s got his eye locked on! Apart from the area of interest that he pointed out, price is also currently testing the 50% Fibonacci retracement level and 200 SMA. Stochastic is indicating overbought conditions, which means that buyers are getting exhausted and might need to take a break soon. If that happens, AUD/JPY could resume its decline and head back to the previous forex lows near the 83.25 area. Take note that the 100 SMA is safely below the 200 SMA, confirming that the path of least resistance is to the downside. However, a break past the longer-term moving average and the 61.8% Fib might be an early signal that the selloff is about to reverse.
If you’re a little more patient, you could wait for this potential long-term retracement play on NZD/USD’s 4-hour forex chart. The pair is pulling up from its recent dive to the .6245 level and might retest the broken support at the .6500 major psychological level. This is right in between the 50% and 61.8% Fibonacci retracement levels, as well as the moving averages. Stochastic is still climbing for now, which means that the correction is still taking place, but price could turn lower once the oscillator reaches the overbought zone. If you’re hoping to short this pair, you could wait for an overbought signal or for reversal candlesticks to form at any of the Fib levels.
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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.