First up is a nice and simple Fib play on EUR/GBP. The pair is currently around the .8580 area, which is right smack at a falling channel resistance AND a 38.2% Fibonacci retracement level on the 1-hour time frame.
What makes the setup more interesting is that the 100 and 200 SMA resistance levels are hanging around current prices right as stochastic hits the overbought territory.
Will the euro extend its downtrend against the pound? Or will the bulls make a play for EUR/GBP’s recent highs? Shorting at current levels could make for a good trade if you think that the pair will go back to last week’s lows and place your stops above the Fib areas. Just make sure you practice good risk management strategies when executing your trading plans!
Here’s another trend play for ya! CAD/JPY has just bounced from the 82.00 major psychological handle, which is right at a bottom of the falling channel on the 1-hour time frame.
You can still squeeze in a few pips if you’re one of them countertrend traders and you believe that CAD/JPY will pop back up to the channel resistance before going back down.
However, the Fib retracement levels, mid-channel resistance, and the overbought stochastic signal should give you some pause. If you think that the Loonie won’t bounce so much before extending its downtrend, then you might want to consider the Fib areas as potential entry levels.