After falling heavily in the second half of the year, Cable has taken it easy and has settled around the 1.2200 – 1.2700 area. But nothing lasts forever and that includes GBP/USD’s consolidation. Right now the pair is sporting what looks like a bearish pennant on the daily chart. What makes the setup more interesting is that the 100 and 200 SMAs are knocking on price action and could very well push forex bulls and bears into action. Will the pair extend its downtrend as the pennant suggests? Or are we actually looking at a symmetrical triangle that could lead to an upside breakout? Read up on trading breakouts if you haven’t done it yet!
NZD/USD just got rejected (again) at the .7250 area, which isn’t surprising since the level has been an area of interest for the pair since December 2015. What’s more, it also lines up with a 61.8% Fibonacci retracement zone! The cherry on top of this potentially bearish sundae is the 100 SMA just crossing below the 200 SMA on the daily chart.
Shorting at current levels could still provide you a sweet reward-to-risk ratio especially if you think that Kiwi bears will gun for its previous lows. But if you think that it’s only a matter of time before we see a Kiwi rally, then you might want to put up your long trade orders above the resistance levels that we’ve identified. In any case, make sure you put all possible scenarios in your trading journal before you place your orders!
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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.