After breaking below a rising channel earlier this week, EUR/USD looks set to retest the 1.1225 area. What makes the level interesting is that it lines up with not only a 38.2% Fib retracement and the previous channel support, but also a falling trend line and 200 SMA retest on the 1-hour time frame. A bounce from the level could drag the euro back down to its weekly lows, while an upside breakout could take it back to its uptrend. Where do you think the pair will go?
Breakout alert! Well, sort of. As you can see on the 1-hour chart, EUR/CAD has just broken above a rising channel. Before you buy the euro like there’s no tomorrow though, you should also take note that the pair is currently lollygagging at a resistance level that held last week. In addition to that, stochastic is already flashing an overbought signal. Buying after the pair makes new highs sounds like a better play if you’re thinking of trading the breakout. But if you’d like a more conservative entry, then you might want to wait for a retracement back to the mid-channel area near the 100 and 200 SMAs before buying the pair.
Last one for this batch of charts is a nice and simple range trade on Cable. The pound is currently stuck just below the 1.3300 major psychological level, an area that has been serving as resistance since late June. What’s more, stochastic is also about to hit the overbought territory. Shorting at current levels could give you a good reward-to-risk ratio especially if you aim for the range support. Of course, you could also wait for an upside break and buy at a breakout if you’re one of them pound bulls or dollar bears.
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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.