Let’s start off with a simple trend play on Cable. The pair just bounced at the 1.5350 area, which is right smack at a trend line support on the 1-hour time frame. What’s more, it’s also where the 100 SMA has crossed above the 200 SMA. If you’ve read your School of Pipsology right, then you’ll know that this usually suggests a start of a trend. Stochastic is currently in the overbought territory so you’ll have room to wait for a slight pullback before you pull the trigger. If you’re confident about the pound though, then you can also place a small long order at market and just place your stop losses just below the trend line and SMA support areas.
Here’s one for countertrend traders! EUR/GBP’s downtrend appears to be unbroken as it remains below the 100 and 200 SMAs. Right now the bears are finding it hard to break the .7100 major psychological support. Stochastic is in the oversold territory though, so we might see a bit of uptick from the pair. A stop just below the descending channel is a good idea if you think the euro will gain some pips on the pound but you can also wait for a bit of pullback (maybe to the mid-channel resistance?) if you’re planning on getting a piece of the downtrend pie.
Somebody call Happy Pip or Cyclopip because this comdoll cross is too good to miss! After bouncing from the 2.2500 area, GBP/NZD shot back up and is now at the 2.3200 levels. Forex bulls better watch out though, because the 2.3400 zone is looming over the pair’s rally. Not only is the area near a 200 SMA test, but it’s also near the 38.2% and 50.0% Fib levels on the 4-hour chart. The level has also served as a pretty solid support back in late July and early August, so the bears are likely waiting at the level. Last but definitely not the least is that overbought Stochastic signal you need to watch out for. A short trade with a stop above the Fibs and 200 SMA would give you good pips if you don’t think the pound isn’t done falling against the Kiwi just yet. Of course, you can also wait for a break above said resistance areas and aim for previous highs if you’re one of them pound bulls.
Forex Chart Settings:
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.