Welcome to a brand spankin’ new trading week, brothas! Let’s hit the ground running with these hot trend plays on USD/CHF and EUR/GBP!
Somebody holler at Huck because this downtrend is too good to miss! USD/CHF is about to hit the 1.0100 major psychological (MaPs) handle, which is right smack at a falling channel resistance on the 4-hour time frame.
What makes the setup even more interesting is that stochastic is also chillin’ like a villain on the overbought territory. Shorting around the 1.0100 area could get you a sweet reward-to-risk ratio especially if you place your stops just above (but not too close) to the channel.
If you’re not too sold on more downtrend for the Greenback though, then you could also wait for stochastic to turn and the pair to gain downside momentum before jumping in with your orders.
If you’ve been watching EUR/GBP long enough, then you’ll know that this baby has been supported by a long-term rising trend line since November 2015. But are the bulls finally ready to hand over the reins to the bears?
The pair is currently lollygagging near .8550, which is right around a symmetrical triangle support on the daily time frame. In addition, stochastic is also flirting around the oversold territory.
But before you buy the euro like there’s no tomorrow, you should note that the 100 SMA has just crossed below the 200 SMA for the first time since the uptrend began in 2015. With a crossover like that, you can bet your pips (with proper risk management, of course) that euro and pound traders will also be on a lookout for a possible downside break.
The School of Pipsology says that patterns like these could inspire breakouts as big as the base of the triangle. In this case, we’re talking about 500 pips or so. Stay sharp and watch for either a bounce or a breakout!