Don’t look now but USD/CAD just broke above the neckline of its inverse head and shoulders pattern on the 1-hour forex chart! This signals that the pair might be in for an uptrend, which might last by around 200 pips or the same height as the chart formation. If you’ve missed the actual breakout move, you might still have a chance to hop in a potential pullback to the broken neckline around 1.3040. Stochastic is already indicating overbought conditions anyway, which means that buyers might need to take a break from their recent climb. Note that the 100 SMA is starting to cross above the longer-term 200 SMA, confirming that a reversal from the previous downtrend is in order.
Looking for another pullback situation? Here’s one on NZD/USD’s 4-hour forex time frame. The pair recently breached the resistance at the .6700 major psychological level then zoomed up close to the .6900 major psychological mark before pulling back. Price appears to be finding support at the area of interest right now, but a larger pullback might be possible since stochastic hasn’t left the oversold region just yet. In that case, NZD/USD could still retreat to the 38.2% Fibonacci retracement level near the .6650 minor psychological support, which is still pretty close to the broken resistance. The 100 SMA is currently above the 200 SMA, indicating that the climb could carry on. Better wait for stochastic to head north if you plan to go long!
Lastly, here’s a simple ascending triangle pattern forming on EUR/AUD’s 1-hour forex chart. The pair is sitting close to the top of the triangle at the 1.5750 minor psychological level, which might continue to hold as a ceiling and push price back to the triangle support near the 1.5650 area. Stochastic is heading south, suggesting that sellers are in control of price action for now. However, the 100 SMA is above the 200 SMA, hinting that an upside breakout might take place sooner or later. Aside from that, price seems to have formed a bullish flag pattern right on the triangle resistance. Euro traders might pick a direction based on the upcoming ECB statement so make sure you’re ready for additional volatility if you’re trading this one.
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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.