This one’s for the euro bulls! EUR/CHF looks like it’s bouncing from the 1.0800 major psychological handle, a support that hasn’t been breached since mid-November. Not only that, but Stochastic has also just left the oversold territory. As you can see above, there’s at least a 100-pip range opportunity in there if you think that the common currency is about to get some pips from the franc. A stop just below the range support could give you a good reward-to-risk ratio if you’re one of them euro bulls. Of course, you could also wait for a break below the 1.0800 handle if you think that the euro bears are just taking a breather.
Not into buying the euro these days? Here’s a short trade for ya. EUR/JPY is hesitating around the 133.80 levels, which is understandable if you zoom out to the 4-hour time frame. You see, the area is near a falling channel resistance that has been playing out since mid-July. A successful bounce from the resistance opens up a move all the way down to the 129.50 levels. Then again, we could also be looking at a bullish pennant in the making. You could wait for a couple more candlesticks to confirm a move, but it doesn’t hurt to have your trading plans ready when volatility starts to fire up.
Last one up for today is an update on yesterday’s trend play. As mentioned yesterday, AUD/JPY could encounter support from a trend line that has been solid since early November. Right now price is right smack at the rising trend line AND 100 SMA. In addition, a bullish divergence has also formed on the 4-hour time frame. Are the signs lining up or what? The cherry on top of this setup sundae is that long doji we’re seeing on the chart. A long trade at current levels could make for a good trend entry if you believe that the pair is heading for its previous highs. Gotta make those stop losses wide though, as currency crosses can be more volatile than the majors!
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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.