This here is the updated 1-hour forex chart based on yesterday’s rising trend line setup for NZD/CAD. Remember how worried I was about the divergence between stochastic and price action? Well, I was right to be worried since the pair did end up breaking through the trend line.
For today’s play, we are looking for the pair to pullback to the price area of significant market interest around the 0.8490 handle, which also sits right smack on the 50% Fibonacci retracement level. Looking at our indicators, the 100 and 200 SMA are about to cross-over to indicate a potential downtrend while stochastic is pointing up and going higher, so there is a potential for a pullback.
NZD/USD has been selling off aggressively recently until it eventually got rejected by the 0.6500 major psychological level. After that, price began consolidating just above the 0.6500 level. Forex traders bullish on the pair could attempt a pullback though, as stochastic is now pointing up, indicating that buyers are in control for now. If price does pull back, the most conservative pullback area would be at the 0.6620 handle since that is the previous support area. Also, that price area lines up quite nicely with the 50% Fibonacci retracement level. Further moves to the down side are supported by our moving averages since they have just crossed-over into downtrend mode.
It took a while but NZD/CHF finally broke through the well-respected support area around the 0.6280 handle, although the downward momentum quickly lost steam when price reach the 0.6200 major psychological level. Now price is grinding ever higher to potentially test the previous support area at the 0.6280 handle. If we apply the Fibonacci tool, we can also see that the said price area sits right on the 50% Fibonacci retracement level. Also, the moving averages are already in downtrend mode.
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.