Let’s begin with simple ascending channel on the 4-hour chart for GBP/AUD. The conservative way to play an ascending channel is to look for support near the bottom of the channel, and lucky us since price just began moving away from the floor of the channel. Unfortunately, price seems to be having difficulty moving past the 2.0500 major psychological level, a price area of recent market interest. Also, stochastic is has already reached the overbought region, hinting that buyers may already be exhausted. The moving averages are indicating that the uptrend is still healthy, though, so our primary directional bias is still to the upside, but do be ready for a possible downside breakout too.
There’s a break-and-retest situation goin’ on in USD/CAD’s 1-hour forex time frame. The pair previously broke past resistance at the 1.2530 handle before being rejected at the 1.2630 handle. Now, price is on its way back down and forex traders bearish on the pair seem to be gunning for the previous resistance area at the 1.2530 handle. And if we apply the Fibonacci tool, we can see that the previous resistance area sits right smack at the 38.2% Fibonacci retracement level and has also seen very significant market interest in the past, as highlighted by the rectangle. And given that the moving averages are still in uptrend mode, we are therefore hoping that support will form at the 1.2530 handle.
We’ve got us another break-and-retest play on the 1-hour forex chart for NZD/USD. After breaking through support at the 0.6750 minor psychological level, price was pushed back when it reached the 0.6670 handle. Now, price is making its way back to the previous support area at 0.6750. Applying the Fibonacci tool, we can see that the previous support area lines up quite nicely with the 61.8% Fibonacci retracement level. Price also seems to be hesitating now that it has reached the 38.2% retracement level, but stochastic has just recently left oversold territory and is still pointing up, indicating that forex traders bullish on the pair may still have some fight left, so th 61.8% retracement level is still the most conservative choice for a potential pullback.
As usual, make sure to practice proper risk management should you find a trade based on any of these charts.
Forex Chart Settings:
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.