What we have here is a symmetrical triangle. Well, it certainly looks symmetrical enough. As with all triangle area patterns, there is really no directional bias since price is just as likely to break to the upside as to the downside. The 100 SMA and 200 SMA are in uptrend mode, favoring an upside move. Stochastic, though, is indicating that price is potentially oversold. Forex traders who are bearish on this setup may want to observe how price reacts to the 2.0850 minor psychological level since that level is actually an area of very significant market interest on the higher time frames.
NZD/CHF seems to have settled nicely into a pretty obvious trading range between two major psychological levels: 0.6900 as the ceiling and 0.6800 as the floor. That’s a yummy 100-pip range.
The trend seems to be down with the 100 SMA below the 200 SMA, so our directional bias is down. And with the price currently near the ceiling of the range, it makes sense that we may see sellers drawn in around current levels. The only worrying thing is that stochastic is in potentially oversold territory, hinting at a possible upside breakout of the range.
Price has been moving in a rather tight descending channel for the past few days. Now, it has reached the 0.7340 handle, a price area of very significant market interest, especially on the higher time frames. For today’s play, there are actually two scenarios: (1) support forms at the 0.7340 handle and an upside channel breakout occurs, or (2) price will respect the channel and continue moving downwards. Our moving averages are oscillating, indicating that there is no clear directional bias while stochastic seems to favor an upside breakout since it is pointing to potentially oversold conditions. Of course, NZD/USD could just ignore both scenarios and move sideways, but that may not be likely with the FOMC meeting minutes coming out later today!
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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.