Well, last Friday’s trading range or rectangle held and price even moved for around 150 pips in our favor. Unfortunately, price wasn’t quite able to reach the bottom of the forex chart pattern since it met buyers around the 1.4750 minor psychological level. I also noticed that resistance at the 1.4900 major psychological level is very well-defended, but forex traders bullish on the pair are relentlessly on the attack, which has resulted in the pair making higher lows or troughs and thereby forming an ascending triangle pattern.
As an ascending triangle, our main directional bias is to the upside, but since the pattern formed in a downtrend, then there is also a possibility that price will have a downside breakout instead. Looking at our technical indicators, the moving averages aren’t rally helping since they’re oscillating while stochastic is already indicating potentially overbought conditions. It’s still pointing up, though, so bulls may not be out of the fight yet. In any case, if this forex chart pattern does break, then we could potentially see a 250-pip move since that is roughly the height of the triangle.
Looks like this descending channel on GBP/USD’s 1-hour forex chart is still intact. Oh, and if y’all forgot already, we identified this channel last Wednesday. Moving right along, the conservative way to play a descending channel is to look for resistance near the top of the channel. And we’re in luck since price is currently seems to be consolidating at the top of the channel. In addition, the moving averages are indicating that the downtrend is still healthy and the 100 SMA is even acting as dynamic resistance. Stochastic has also reached overbought territory already, and is even starting to point down, so forex traders bearish on the pair may potentially be taking over soon. The channel is kinda tight, though, since it only has a volatility of around 100 pips.
And now for something different. For this play, we’re lookin’ at a plain vanilla (ice cream!) Fibonacci retracement play on GBP/JPY’s 1-hour forex time frame. As y’all can see, the pair pushed through support at the 182.50 minor psychological level before finally being repelled at the 180.50 minor psychological level. Currently, price is making its way back up towards the broken support/potential resistance area around the 182.50 minor psychological level. And if we use our handy-dandy Fibonacci tool, we can see that price is currently consolidating at the 38.2% Fibonacci retracement level. Moreover, stochastic has already been staying in the overbought region for a while now, so forex traders bullish on the pair may be exhausted already. Still, the most conservative pullback area would be the 50% retracement level since that level is closest to the 182.50 minor psychological level.
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