First up is a nice and simple downtrend play. USD/CHF is currently consolidating around the .9900 major psychological area, which is right smack at a falling channel AND 200 SMA resistance on the 1-hour time frame. Talk about the stars lining up! What makes the setup even more interesting is that stochastic is also chillin’ like a villain on the overbought territory.
Shorting at current levels could get you a good reward-to-risk ratio especially if you think that the dollar will revisit its monthly lows around .9800. Don’t place your stops too close to the channel resistance though, as we could still see a bit of volatility before the trend traders jump in.
Here’s one for the range playas out there! GBP/USD executed a U-turn at 1.2600 and it looks like it’s headed fast for the 1.2150 long-term range support. Will the 100 SMA and 1.2400 mid-range support give pound bears any trouble? Or will they take one look at stochastic’s overbought signal and add their weight to a downward momentum?
A short trade at current levels could still get you a decent reward-to-risk ratio especially if you place your stops just above this month’s highs and aim for the 1.2150 range support. Make sure you use wide stops, aight?
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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.