Today’s setup is built upon yesterday’s EUR/CAD intraday channel setup on the 1-hour forex chart. Congratulations to those who caught that 90-pip breakout move, but for those who missed the ride, worry not for you may find an opportunity today.
After breaking out of the descending channel, price immediately found some sellers, but the forex traders who were bullish on EUR/CAD were just too powerful. As a result, a new ascending channel has formed. Price is currently near the bottom of the 80-pip volatility channel, but will support form? I think there is a high probability because (1) the current price area has seen significant market interest in the past, (2) the 200 SMA is acting as dynamic support, (3) price has been closing above the 100 SMa and 200 SMA, (4) stochastic is slowly creeping towards oversold territory, indicating that sellers may potentially be exhausted.
Do note, though, that the moving averages are still in downtrend mode and that price has difficulty pushing past the 1.3660 handle. This implies that sellers are really putting up a fight and that they have a slight chance of pushing price back into the descending channel.
My good friend, Happy Pip, saw an ascending channel on the 1-hour chart for GBP/NZD. I, on the other hand, see an ascending triangle with a false breakout. It’s cool, though, since we both agree on the directional bias – up.
GBP/NZD has been consolidating into an ascending triangle. There was a breakout on May 21, but it was quickly overcome by forex traders who were bearish on the pair. Today, we’re witnessing another breakout attempt. But will momentum be sufficient to push price upwards or will the sellers prevail again? After all, stochastic is already indicating potentially overbought conditions.
Also, this is a triangle area pattern, so prepare for a potential downside breakout too, although price action indicates that such a scenario is quite unlikely.
By the way, Happy Pip already has a trade, so make sure to check out her blog.
It looks like price has been finding it difficult to push down and through the 1.0900 major psychological level since that level is also within a price area of very significant market interest. And if we apply the Fibonacci tool, we can also see that price is currently at the 61.8% retracement level. Also, the overall trend is still up, so directional bias is therefore for an upside move.
And even though it’s highly unlikely, a downside move may also occur given that price seems to be respecting the downtrend trend line that you can see on the forex chart.
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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.