Price has been respecting this ascending channel since the last week of July. Currently, price seems to be testing the bottom of the channel, and, as y’all already know, the most conservative way to play an ascending channel is to look for support near the bottom. Our technical indicators aren’t really giving our upside bias a vote of confidence, though, since stochastic is currently still a long way from oversold territory, and it’s still pointing down, so forex traders bearish on the pair may still be in control. As for the moving averages, they’re still in uptrend mode, but they’re coming closer together for a potential cross-over into downtrend mode. In any case, make sure to prepare for a possible downside channel breakout too.
The pair is currently moving sideways as it tests the price area around the 119.80 handle. You can’t see it on the chart, but if you zoom out of the 1-hour forex chart or climb to a higher time frame, you can see just how significant the market interest is around the 119.80 handle, so there’s a better-than-average chance that support here will hold. In addition, price action is in favor of an upside move since price has been forming higher peaks and higher throughs. Also, stochastic is currently pointing up and moving away from the oversold area, so forex traders bearish on the pair may be exhausted already. The moving averages are still in downtrend mode, but that is about to change since they’re coming ever closer together for a possible cross-over.
After getting rejected by support around the 0.9290 handle, price began surging higher until it found resistance at the 0.9670 handle, a price area of significant market interest even on the higher time frames. Seller interest seems rather strong but forex traders who are bullish on the pair just won’t give up. As a result, a consolidation area has formed. If we pair this consolodiation area with the previous bullish surge, then we got us a bullish flag.
Looking at our technical indicators, stochastic already left the oversold region and is moving up. The moving averages have also recently crossed-over into uptrend mode, and the 100 SMA is even acting as dynamic support. In addition, the consolidation area formed above the moving averages, which is another technical argument for a bullish bias. Moving along, if this forex chart pattern is validated, then price could have enough momentum to move for around 350 pips since that is roughly the volatility of the pattern. As usual, make sure to practice proper risk management should you find a trade based on this or any of the other 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