Euro bears, listen up! The descending channel on the 1-hour chart for EUR/CHF is still intact after price bounced off the bottom of the channel. The basic (and conservative) way to play a descending channel chart pattern is to look for resistance near the channel’s roof. But recent price action shows that price is already finding sellers mid-channel. Even better is the fact that both the 100 SMA and 200 SMA are acting as dynamic resistance. Stochastic is also approaching overbought territory, so forex traders bullish on the pair may potentially be exhausted already.
After several attempts to break past support at the 0.6890 handle, price finally managed a breakthrough. Kiwi bulls then pushed price back up to the 0.6890 handle, with the initial reaction being a rejection. Is that a sign that resistance has formed? Perhaps. First of all, the moving averages are indicating a healthy downtrend. Second, the 100 SMA is acting as dynamic resistance. Third, stochastic is currently moving down from overbought territory. And last but not least, the 0.6890 handle has seen significant market interest in the past, as highlighted by the rectangle, so perhaps forex traders bearish o the pair would be drawn in soon enough.
Similar to the intraday forex chart for NZD/USD, EUR/GBP broke past support at the 0.7140. The main difference is that there is no pullback yet, so we can apply our Fibonacci tool on this one. And as can be seen, the 50% and 38.2% Fibonacci retracement levels are the most likely candidates for price to pullback to since both are close to the former support area around the 0.7140 handle. Both retracement levels would also have the 100 SMA around to act as dynamic resistance.
As usual, make sure to practice proper risk management should you find a trade opportunity based on any of these charts.
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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.