Guess who managed to stay in a channel despite yesterday’s volatility! That’s right, GBP/JPY did! The pair found resistance just above the 185.50 handle and the candlesticks are currently hinting at hesitation around the area. What’s more, Stochastic is also flashing an overbought signal. Will the falling channel resistance hold for another day? A short around current levels could get you some pips if you place your stops above the resistance lines. Of course, you could also wait for an upside breakout if you believe that the pound isn’t done gaining ground just yet. Just read up on trading breakouts if you haven’t tried it yet!
Remember that USD/JPY rectangle that we were looking at earlier? Well, it looks like the range has also survived yesterday’s volatility! The pair found support at the 122.30 area, a level that has held since mid-November. Not only that, but Stochastic is also currently on the bulls’ side with its oversold signal. A long position in this case could make for a good trade if you think that USD/JPY is headed back up to its range resistance. Like in the setup above though, a breakout is still a possibility with this pair. After all, I’m hearing from the grapevines (let’s call them Forex Gump and Pip Diddy) that we might see a spike in volatility again today. Gotta be careful and make sure you got your risk management plans inked on your trade journals!
Last one up for today is a simple break-and-retest scenario on GBP/AUD. After breaking below the 2.0780 support, the pair looks like it’s bouncing back and is headed for a retest. Will the previous support hold as resistance this time? Stochastic is nearly overbought, which could help the bears wait for a small move higher before making their moves. If the pound does find trouble breaking above the previous support, then stops above the levels could make for a good trade especially if you aim for previous lows.
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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.