Let’s start the week with a nice and simple retracement play on USD/JPY. After hitting bottom at the 111.00 area, the pair has since jumped and is now testing the 113.50 levels. What makes this hot is that it lines up with not only a falling trend line, but also a 61.8% Fib and 100 SMA on the 1-hour time frame. Heck, even Stochastic is screaming for a short trade! Think the dollar is in for more losses against the yen? Get your trading plans ready if you’re one of them yen bulls!
Next up is another retracement, this one of a countertrend nature. GBP/NZD had trouble breaking above the 2.1900 levels and is now headed fast for the 2.1800 area. The bulls and bears could have a battle on their hands, as the broken falling channel resistance, 100 and 200 SMAs, and the 38.2% Fib could now support another leg higher and hinder the bears from dragging the pair back to its downtrend. Waiting for a direction seems like the best play for now especially if you’re not used to making countertrend trades.
GBP/JPY is heading for the 165.80 levels, which is right smack at a previous support and 38.2% Fib on the 4-hour chart. Stochastic is also an indicator to watch with its almost overbought signal. Shorting at the previous support could get you decent pips if you aim for the previous lows. Of course, you could also wait for the pair to break above the support levels if you’re one of them pound bulls. In any case, you still have time to whip up your trading plans if you’re planning on trading this one!
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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.[glossary_thesaurus term=””]