I spy with my shaded eyes a double bottom breakout in the making! AUD/USD bulls are holding the .7000 psychological handle pretty well, as the pair has bounced from the area at least twice now. Will it lead to a double bottom breakout? Stochastic is currently in the bulls’ favor while the Aussie heads to the pattern’s neckline at around .7075. If you’ve read about double bottoms on the School of Pipsology, then you’ll know that the extend of the breakout is likely as tall as the distance from the “bottoms” to its neckline. This could give you at least a 70-pip move if price does break higher. Watch this setup closely, aight? You wouldn’t want to get caught up in a fakeout!
Here’s a simple retracement setup for ya! After falling to the 1.5050 zone, GBP/USD has bounced by almost 100 pips and it looks like it’s headed for the 1.5200 levels. Forex bears could be watching the area, as it had served as solid support levels back in September. Not only that, but Stochastic is also about to hit its overbought signal. A short around the Fib retracement levels with a stop above 1.5300 is looking like a good trade setup especially if you believe the pair is going back down to its previous lows. A buy order at current levels with a stop just below previous lows could also get you decent pips if you think Cable is actually getting back up to its highs near 1.5500.
Here’s one for countertrend traders! EUR/CAD has been chugging along a falling channel on the 4-hour time frame since mid-October. Right now the pair is having trouble breaking below 1.4150, which is fortunate if you’re also watching the possible bullish divergence on the chart. We don’t usually recommend countertrend trading to newbies, but you could probably get a couple of pips in if you think EUR/CAD is headed back to its channel resistance, if not test the SMA lines. Just make sure you follow a strict set of rules and log them in your journal to help you manage your risk!
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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.