GBP/CAD has been respecting a 180-pip trading range with resistance at 2.0320 and support at 2.0140 for a couple of weeks now. Currently, price is testing the trading range’s resistance. Will this level hold? Well, I think that there’s a good chance that it will. Stochastic, for one, is already in overbought territory, indicating that forex traders bullish on the pair may be exhausted already. There is a possibility of an upside breakout, though, since this trading range looks like a bullish flag on the higher time frames.
After validating a pretty obvious head-and-shoulders pattern, price moved for roughly 80 pips from the forex chart pattern’s neckline. Since the down move is equivalent to the height of the forex chart pattern and stochastic is already indicating potentially oversold conditions, there’s a good chance that forex traders who shorted the pair may be jumping ship soon. In addition, the current price area around the 0.7000 major psychological level has seen some market interest in the recent past and the moving averages are still in uptrend mode. If support does form, price would likely try to test the neckline at the 0.7070 handle.
It’s time for my favorite break-and-retest play! Yesterday, GBP/CHF managed to break past resistance at 1.5030 with sufficient and convincing momentum. Now, the bullish momentum has stalled around the 1.5160 handle. Will a pullback occur? I sure hope so since stochastic is already pointing down after spending some quality time over at the overbought area, so forex traders bearish on the pair may be taking over soon. As an additional confidence booster, the 1.5030 handle sits right smack on the 38.2% Fibonacci retracement level and the moving averages just crossed-over into uptrend mode.
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