Time for a breakout? EUR/CHF has been consolidating inside a symmetrical triangle for more than a month already, and it looks like the pair might need to head out of it soon. The question is: Which way will it go? The moving averages are crossing back and forth, barely offering any good clues at the moment, while stochastic is on the move up. This suggests that price might attempt to break above the triangle resistance around the 1.0950 minor psychological resistance. If all goes according to the euro bulls’ plan, EUR/CHF could climb by an additional 250 pips, which is roughly the same height as the triangle pattern. On the other hand, a downside break below the support at the 1.0900 mark could lead to a 250-pip selloff.
Now here’s a pair that’s already made a break for it! GBP/CAD formed a head and shoulders pattern on its 4-hour forex time frame, showing that it’s tired from the recent climb and is ready to reverse. Price already breached the neckline and is on the decline, with the downtrend likely to last by at least 800 pips or the same size as the chart formation. The 100 SMA is below the 200 SMA already, confirming that further losses are possible, but stochastic has been lingering in the oversold region for quite some time. This suggests that pound bears might need to take a quick break soon, possibly leading to a small pullback before the selloff resumes. Better be ready to catch that correction if you’re hoping to short at a good price!
If you’d rather stick to the ranges, then you might like this descending triangle setup on EUR/USD’s 1-hour forex chart. Price just got rejected on its latest test of resistance and might be ready to head down to the support area at the 1.1115 level. The moving averages are still oscillating, which means that the pair is likely to cruise inside this chart formation for a while. Stochastic is already indicating oversold conditions and is starting to turn higher, suggesting that a bounce might take place sooner or later. If the triangle support holds as a floor, another test of the resistance around 1.1200-1.1250 might take place. And so on and so forth until the pair feels ready to pick a direction, potentially starting a 600-pip trend or the same size as the triangle 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.