After hitting resistance at the .6770 area, NZD/USD fell down and is now back at the .6700 levels. What makes this setup interesting is that the area is also near a mid-channel line AND the 100 and 200 SMA lines. Think we’re about to see a bounce? Stochastic is currently on the bulls’ side but there’s definitely room to wait in case price bounces at the channel support instead of the mid-channel zone. A long trade around current levels could be a good idea if you think that the pair is about to see a bounce. On the other hand, you could also wait for more candlesticks to confirm a move higher if you aren’t sure about the Kiwi’s strength just yet.
Rising channels not your thing? Here’s a countertrend trade for ya! EUR/JPY is fast approaching the 132.00 area, a level that has served as support back in early September and again in late October to early November. Are the euro bulls willing to trade at these levels once again? A bounce at the mid-channel line can open a move to the 134.00 handle. Make sure you keep your stop losses wide if you’re trading these pair. You know how currency crosses can be more volatile than the majors!
Last one up for today is another countertrend, this time on GBP/AUD’s 4-hour time frame. The pair is headed for the 2.1300 area, a pretty strong resistance level back in late October and early November. Not only that, but Stochastic is currently sporting an overbought signal. A short around the resistance area with stops just above the falling channel could be a good trade if you think the pound isn’t done weakening against the Aussie just yet. On the other hand, you could also wait for an upside breakout if you’re one of them pound bulls or Aussie bears who think the downtrend is at its end. Just make sure you manage your risk well!
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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.