Is EUR/USD in for another breakdown? A quick look at the 1-hour chart shows us that the pair is consolidating at the 1.0750 area after falling sharply last Friday. This isn’t surprising since the pair had also been on a bearish rectangle a few trading sessions before the NFP release. It doesn’t look like EUR/USD isn’t going anywhere far anytime soon, so you’ll have time to wait for the pair to hit the 100 SMA support if you’re planning on shorting the euro. If you’re one of them euro bulls though, then you could also wait for a break above the consolidation or a trip to the 1.0700 major psychological handle for better reward-to-risk ratio.
Here’s one for dollar warriors! USD/JPY recently found resistance at the 123.50 minor psychological handle and it looks like it’s making room for more retracements. The 122.50 to 122.00 levels are looking promising, as they’re near possible Fib retracements and even SMA support bounces. Oh, and did I mention that Stochastic is already flirting with an oversold signal? A long trade around the Fib areas with stops below the SMAs could make for good trade ideas if you think the Greenback will make new highs against the yen. Of course, you could also buy at market prices with smaller position sizes and just build your position as the pair retraces lower. Just make sure you manage your risk well!
Last one up for today is a short and simple trend play on CAD/JPY. See, the pair hasn’t broken its rising channel pattern on the 1-hour chart. What makes the setup interesting is that it’s currently hovering just above a trend line AND 100 SMA support. Not only that, but a bullish divergence is also making itself known on the chart. A small long trade around current levels with stops below the SMAs could give you decent pips if you think the Loonie is in for more gains. On the other hand, a short trade just below the channel could make for a good breakout trade if you’re one of them Loonie bears or yen bulls.
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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.