GBP/AUD is lollygagging at the 1.6900 major psychological handle, which isn’t surprising since it lines up with the 200 SMA on the 4-hour chart as well as a trend line support that has been valid since mid-November. Not only that, but stochastic is also chillin’ like a villain on the oversold territory. Before you buy the pound like there’s no tomorrow though, you should also take note that the bulls have not broken above the 1.7150 resistance. In fact, we could very well be looking at an ascending triangle in the making! And as you know, not all ascending triangles break to the downside. Watch this one closely for clues on whether we’re gonna get an extension of an uptrend or a downside breakout, will ya?
If you’re more into comdoll trading, then here’s a sweet setup for ya! AUD/NZD looks like it’s about to get rejected from the 1.0450 psychological handle, which is also right around the 100 and 200 SMA as well as a falling trend line that hasn’t been broken since early October. Oh, and check out stochastic hanging out in the overbought region! Shorting at current levels could get you a decent reward-to-risk ratio especially if the Aussie’s downtrend persists. Don’t place your stops too near the trend line though, as currency crosses like these tend to see more volatility than the majors!
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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.