Price has been gradually edging lower for over a week now, forming a descending channel in the process. There was an upside breakout attempt on July 22, but it was quickly faded, which shows how strong the sellers are and helps to justify further moves to the downside. The moving averages also crossed-over into downtrend mode just recently, further reinforcing our downside bias. Now, the conservative way to play this forex chart pattern is to look for resistance at the top of the channel, but it already looks like price is beginning to find resistance mid-channel. Stochastic is moving up from the oversold area, though, so forex traders bullish on the pair may not be out of the fight yet.
Next up is my all-time favorite break-and-retest situation! As you can see on EUR/AUD’s 1-hour forex chart, the pair appears to be running out of steam with its upside move and is even beginning to grind lower. If we apply the Fibonacci tool, we can see two potential pullback areas at the 38.2% and 50% retracement levels. Both potential pullback levels also sit right smack on price areas of significant market interest, with the 38.2% level lining up with the 1.5020 handle while the 50% level is aligned with the 1.4950 minor psychological level.
Like GBP/CHF, GBP/NZD has been moving lower inside a descending channel. The main difference, though, is that GBP/NZD looks like it has found support at the 2.3450 minor psychological level since the pair already tried to go lower twice before, but failed both time. Now, price is consolidating above that level, giving us two scenarios: (1) price respects the channel and moves lower or (2) forex traders bullish on the pair win out and attempt an upside channel breakout. Looking at out technical indicators, the moving averages have already crossed-over into downtrend mode, with the 100 SMA acting as dynamic resistance. Stochastic, meanwhile, is already indicating potentially oversold conditions, so bears may be exhausted already.
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.AUD/CAD 1-hour Forex Chart