Dollar warriors huddle up! Yesterday we saw forex traders push USD/JPY below the 119.00 handle before pausing for breath. Will the strong move lead to a retracement back to the 120.50 area today? Chances are not looking good with Stochastic already in the overbought territory. Still, the 120.50 psychological level would be hard to resist. Right now the area is lining up with not only an area of interest last December, but also the 100 and 200 SMAs on the 1-hour time frame. A short around the area could get you some pips if you think that the yen’s strength will gain momentum. Of course, you could also enter at current levels with stops above the 120.50 zone if you think that the dollar won’t get any higher before it gets dragged back down.
Here’s one for trend traders out there! NZD/USD is finding support around the .6750 minor psychological area. What makes this setup interesting is that it also lines up with a rising channel support. Think we’ll see another bounce from the pair? A long trade at current levels could pave the way for a 150-pip trade if you believe that the Kiwi will reach the .6900 area. On the other hand, you could also wait for a breakout below the support if you’re one of them comdoll bears. Just make sure you’ve read about trading breakouts if you haven’t tried it yet!
Last one up for today is a neat countertrend play on EUR/JPY’s 4-hour time frame. The pair fell sharply yesterday and is hitting a potential support around the 129.00 major psychological handle. What makes this setup interesting is that it’s also currently around a falling channel support, one that has been valid since mid-July last year. Who do you think will win this round of tug-o-pips? A long trade near the support zone is a good idea if you’re not sold on the yen gaining more ground today. Be careful about making countertrend trades though, as it’s definitely not for everyone. Try making trading plans if you’re not sure how you would play this out!
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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.