GBP/USD: 1-hour
First one up for today is Cable’s trip down to the 1.5050 level. As you can see on the chart, the area has been serving as an area of interest for the pair since early November. Right now it’s also lining up with possible Fib retracement levels. The cherry on top of this pullback setup is Stochastic showing an oversold signal. Will the bulls pay attention and push the pair back above the 1.5100 zone? A long trade at current levels could get you a good trade if you pay attention to your reward-to-risk ratio but you could wait for some reversal candlesticks to pop up if you aren’t too excited about buying the pound.
USD/CHF: 4-hour
Here’s another retracement trade for ya! After gunning for the 1.0200 area, USD/CHF has found resistance and looks like it’s headed back to the .9850 line. What makes this setup interesting is that the minor psychological handle has served as a pretty solid resistance back in August to early October and is currently right smack in the middle of Fib retracement lines. Right now the pair is showing signs of a potential bounce after last week’s strong moves. If USD/CHF does go back up, then you’re looking at a possible trade at current levels with stops just below the Fib lines and previous resistance. Just make sure you solidify your risk management plans before you hit this setup!
AUD/JPY: 4-hour
Last one up for today is another retracement trade, this time on a pretty solid uptrend. AUD/JPY’s rally hit a snag around the 90.50 area and is now back down to the 89.50 levels. The bulls could be watching this area, as it’s near a previous resistance as well as the 61.8% Fib lines, a rising trend line, and the 100 SMA on the 4-hour time frame. Talk about a good bargain! Stop losses below the support lines could get you some pips if you aim for the pair’s previous highs. Be careful about trading currency crosses though, as they usually give you more volatility than the majors.
Forex Chart Settings:
Slow Stochastic: 14,3,3
100 SMA: Blue line
200 SMA: Red line
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.