As I said yesterday, I was rather worried that price would have to break a well-respected rising trend line in order to reach the bottom of the trading range or rectangle that we identified on Monday. Well, looks like my worries were well-founded since a rectangle breakout + trend line break combo just occurred, as y’all can clearly see on the 1-hour forex chart. But price is now approaching a price area of significant market interest around the 1.4760 handle, so there’s a good chance for a pullback. And using our Fibonacci tool, the most viable pullback area seems to be the 38.2% retracement level since it lines up rather well with the 1.4900 major psychological level, which used to serve as the rectangle’s support area. Also, Stochastic is already indicating potentially oversold conditions, so we may be seeing some buyers coming in soon.
GBP/AUD just bounced off the top of a potential ascending channel. I say “potential” because price has to reach the bottom first before the forex chart pattern is validated. Incidentally, the most conservative way to play an ascending channel is to look for support near the bottom of the channel, and price is already halfway there, so we may be getting a trading opportunity real soon. In addition, the moving averages have just crossed over into uptrend mode. Even better, if price does reach the bottom of the channel, then the 100 SMA could potentially act as dynamic support since it’s currently hugging the bottom of the channel.
After breaking through a rising trend line that has been respected at least three times, price got repelled when it reached the 2.0200 major psychological level. Now, the pair has made its way back and is using the broken trend line as a resistance, which means that we now have a potential break-and-retest setup on the menu. And if we apply the Fibonacci tool, we can clearly see that price is currently testing the 61.8% retracement level, and it’s holding, too. Looking at our technical indicators, the stochastic oscillator is almost at the overbought area, so sellers may start nibbling soon. The moving averages are also very close together, so a cross-over into downtrend mode could occur any time. As usual, make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
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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