After a downside breakout from an ascending channel that has been respected since the end of June, price got rejected when it hit the 2.1030 handle. Now, price is making its way back up again. If we apply the Fibonacci tool, the most likely pullback area would be at the 50% retracement level since it lines up quite nicely with the 2.1240 handle, a price area of significant market interest. Looking at out indicators, the moving averages have just crossed-over into downtrend mode and stochastic is currently at the overbought region, so forex traders bearish on the pair may be coming in soon. It’s possible, though, that price will hit the 61.8% retracement level instead since that level sits right smack on the 2.1300 major psychological level.
If you’re brave enough to take a countertrend setup, then this is just for you. As you can see, CHF/JPY has been moving inside a descending channel for quite some time now. And as you can also see, price is currently at the bottom of the channel, but the bears may be exhausted already since stochastic is currently in oversold territory, so there’s a possibility that price would be going up soon. If price does go up, it would probably attempt to hit the 128.00 major psychological level since that is a price area of recent market interest, as highlighted by th rectangle. Let me just reiterate that the conservative way to play this forex chart pattern is to look for resistance near the top of the channel, and looking for support in a downtrend may be too risky for most forex traders.
The pair broke through resistance around the 0.9630 handle with sufficient and convincing momentum, but it quickly found resistance at the 0.9750 minor psychological level. Now, price is grinding lower for a potential pullback to the broken resistance area at 0.9630. And if we apply the Fibonacci tool, we can see that the 61.8% retracement level lines up roughly with the 0.9630 handle, although it’s also possible that price will find support on the 505 retracement level since that lines up exactly with the 0.9650 minor psychological level. Stochastic just came from oversold territory, but it’s already pointing back down again, so sellers may not yet be out of the fight. The moving averages also just recently crossed-over into uptrend mode, confirming our main directional bias.
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