I spy with my cool, blue eyes a support-turned-resistance scenario in the making! USD/CHF is having trouble breaking above the 1.0250 minor psychological handle, which had served as support for the pair during the second half of December. What’s more, stochastic is chillin’ like a villain on the overbought territory! The cherry on top of this potentially bearish sundae is that the 100 and 200 SMAs are just above the 1.0250 MiPs. Shorting at current levels could get you a pretty sweet reward-to-risk ratio especially if you place your stops just above the previous highs. Just make sure to watch your position closely in case the Greenback bulls come out of the woodwork today!
Here’s one for the trend traders out there! USD/JPY is lollygagging at the 117.50 minor psychological level, which isn’t surprising since it lines up with a falling channel retest on the 1-hour time frame. Shorting around the MiPs handle could make for a good trade especially now that the 100 SMA has crossed below the 200 SMA. However, if you’re one of them dollar bulls, then you can also wait for a break above the falling channel and wait for an upside breakout.
Speaking of breakouts, Cable has just been rejected around the 1.2300 handle and has now formed what looks like a double bottom on the daily chart. Stochastic is also hanging around the oversold territory, so you can bet your next pips that pound bulls are waiting to see if the pair gains upside momentum. The 1.2650 is the “neckline” to watch especially since it’s also near the 100 SMA on the chart. Buying at market is the most aggressive play for this setup though you can also wait for a break above the neckline if you’re not too sure about the pound’s upside momentum just yet. Meanwhile, if you’re a perma pound bear, then you can also wait for a “retracement” to the SMAs for possible short entries.
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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.