First up is a nice and simple support play on Cable’s 1-hour time frame. The pair just bounced from the 1.2300 major psychological handle, which is right around a level that had served as resistance back in October. Not only that, but the area is near a 61.8% Fibonacci retracement! The cherry on top of this potential bounce is a bullish divergence on the chart. Think the pound is set to gain against the dollar? Buying at current levels is a good idea especially if you place your stops just below the 1.2300 MaPs. But if you think that forex bears aren’t done with the pound just yet and that the SMA crossover is signalling further losses, then you could also short the pair at a break below said support levels.
I spy with my bedroom eyes a potential double bottom in the making! EUR/AUD bulls had defended the 1.4150 level twice in the past couple of weeks and this time they’re gunning for the “neckline” around the 1.4500 area. What makes this setup more interesting is that the 100 and 200 SMAs are also just above the double bottom neckline that we’re watching. Will a break above the 1.4500 area lead to an upside breakout? Or will the SMAs manage to keep the bulls in check? Watch this one closely, fellas!
After finding resistance at the 1.0400 psychological handle, AUD/CAD has dropped sharply and is now lollygagging at the .9800 area, a level that lines up nicely with a previous area of interest and today’s 50% Fibonacci retracement. Not only that, but stochastic is also flashing an oversold signal. Think the Aussie has retraced enough against the Loonie? A long trade at current levels would give you a good reward-to-risk ratio especially if you aim for the previous highs. Don’t be too stingy on your stop losses though, as currency crosses like this one often see more volatility than the majors. You don’t want to get stopped out before the real moves begin, do you?
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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.