Looks like GBP/USD has been moving downward in a pretty neat descending channel, and since price is currently at the top of the channel, there’s a pretty good chance that forex traders bearish on the pair will start to nibble. The 200 SMA is acting as dynamic resistance too while stochastic is already in overbought territory, signalling that forex traders bullish on the pair may be exhausted already. My only concern is that the moving averages are still in uptrend mode, so it’s possible that price will attempt an upside breakout from the channel and resume the uptrend.
Bam! We’ve got us another forex chart pattern. This time, we have an ascending triangle forming in the 1-hour chart for GBP/CAD. As an ascending triangle, our directional bias is to the upside. The moving averages confirm our directional bias since they’re still in uptrend mode, with the 100 SMA acting as dynamic support. As with all triangles, there is also a chance that price will actually break in the opposite direction, so prudent forex traders should prepare for that possible scenario too. It’s worth mentioning that stochastic is moving into overbought territory, so perhaps buyers may become be exhausted already.
After a downside breakout from the trading range between the 195.80 and 194.60 handles, price encountered enough buyers to send it back to the bottom of the trading range around the 194.60 handle. So where will price go from here? I see three major scenarios: (1) price retests the former support area at the 194.60 handle and goes back down, (2) price re-enters the trading range and stays there, or (3) price re-enters the trading range and then breakout to the upside. I personally favor a downside continuation since stochastic is indicating potentially overbought conditions and because the 194.60 price area has seen significant market interest in the past. Also, the 100 SMA and 200 SMA are coming together for a potential downtrend crossover.
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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.