We already played this setup last week and the week before that, but it looks like the ascending channel on the 1-hour forex time frame is still intact, so let’s go with it. The conservative way to play an ascending channel is to look for support near the bottom, but price is currently near the top of the channel. It’s okay since the pair looks about ready for a pullback since stochastic is pointing down, which means that bears may already be in control. I have to warn ya guys that this setup is only for the stout of heart since the moving averages are indicating that the trend is still intact, and it also looks like the 200 SMA is acting as dynamic support.
It’s rare to get both a continuation setup and a reversal play in one chart, but that’s what we’re looking at. Our primary play for today is the longer-term Fibonacci setup. And as you can see, price tested the 50% retracement level at the 92.00 major psychological level twice and failed both times, thereby forming a potential double top reversal pattern. If the double top is validated, then the pair could move for about 100 pips since that is the height of the forex chart pattern. But if the Fibonacci setup is in play, then price could possibly go further south. Stochastic is already indicating potentially oversold conditions, though, and it looks like there’s a chance that the 200 SMA may act as dynamic support, so there’s a chance that the pair could move higher or consolidate.
Think the trend is your friend? Then this AUD/NZD uptrend setup is just for you! The pair is already pulling back on its 1-hour forex time frame and it might just pull all the way down to the 1.1230 handle, a price area of significant market interest that sits right smack on the 50% Fibonacci retracement level. The 100 SMA and 200 SMA have already crossed over into uptrend mode, and it looks like the 100 SMA would potentially act as dynamic support should price pull back to either the 50% and 61.8% retracement levels. Stochastic is already in oversold territory but it’s still pointing down, so forex traders bearish on the pair may still have enough control to push the pair to our desired levels.
As usual, make sure to practice proper risk management should you find a trade 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.