USD/CHF is finding resistance at the 1.0200 major psychological handle, a level that has served as a roadblock for the bulls just last week. Right now it looks like it’s serving as range resistance on the 1-hour chart. Will the level hold for another day? Stochastic is on the bears’ side with an overbought signal. Be careful about shorting this one though, as the 100 SMA is lurking just above the range support area. A short at current levels is a good idea if you think the bears would step in at the level. If you’re one of them dollar bulls though, then you could also wait for a retest to the 100 SMA or mid-range area for a long trade entry.
Remember that trend line setup we were talking about last week? Well, it looks like the line broke after all. All hope is not lost for the bulls though, since GBP/JPY is now showing a possible bounce at the 186.75 area. The level lines up nicely with a rising channel support and is supported by a bullish divergence on the 1-hour time frame. A long trade at current levels could get you some pips if you place your stops below the rising channel support. Take care not to tighten your stops though, as currency crosses tend to be volatile. Price could hit your stop loss levels before you could say “pips!” if you’re not careful.
Here’s one for trend traders! After breaking above an ascending triangle pattern last week, AUD/JPY is showing some signs of exhaustion around the 89.00 levels. Price could likely fall back down to the 88.00 area, where a 50% Fib is waiting right along with the triangle’s previous resistance levels. A long trade around the possible retracement zone is a good idea especially since it will be closer to the 100 and 200 SMA lines. If you think that the pair has shown a fakeout and is actually headed lower though, then you could wait for a break below the support levels before putting on your orders. Just log it in your trade journals so you won’t forget how you traded the setup!
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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.