Breakout alert! USD/CAD looks like it’s breaking below a rising channel, as price has started to drop below the 1.3300 major psychological handle. What’s interesting about the setup is that it also looks like it’s breaking below the 100 and 200 SMA support on the 1-hour time frame. Are we seeing the start of a downside breakout for the pair or are we about to see a fakeout in the making? Read up on trading breakouts if you haven’t tried trading them yet. If you think that price will soon return on its merry way up though, then you might want to consider a long trade with stops waaaaay below the 200 SMA and targets around the channel resistance.
Here’s one for countertrend traders! Unlike in USD/CAD, NZD/USD has actually managed to stay within its falling channel perimeters. In fact, the pair looks like it’s headed for the pattern’s resistance after bouncing from the .6450 area. Be careful about buying the pair though, as price is currently near a 200 SMA resistance while Stochastic has just popped up an overbought signal. A long trade with stops below the channel support could get you a decent trade if you think that the pair is headed higher while a trade with stops above the SMAs and mid-channel line could also get you pips if you think that the pair isn’t done falling just yet.
I spy with my Ray-B-covered eyes a possible double bottom in the making! As we can see above, the bulls are successfully defending the .7000 major psychological handle, enough for a possible double bottom pattern to emerge. If you’ve read the School of Pipsology, then you’ll know that double bottoms usually signal the end of downtrends. I would be careful about buying the pair though, since the 100 and 200 SMAs on the 1-hour chart as well as Fib retracement levels could still threaten the pair’s advance.
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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.