After finding resistance at the 0.6540 handle, NZD/CHF smashed through with sufficient and convincing momentum before getting repelled at the 0.6680 handle and creating a textbook break-and-retest setup in the process. We’re waiting for price to find support since our directional bias is still to the upside given that the moving averages are still in uptrend mode. And if we apply the Fibonacci tool, we can also see that price is currently approaching the 38.2% retracement level. There’s a chance that price will find support at the 38.2% level since stochastic is already in oversold territory, but conservative traders should probably wait until price reaches the 50% retracement level since that level lines up rather nicely with the previous resistance area at the 0.6540 handle.
One scenario I considered for yesterday’s trend line setup on GBP/NZD’s 1-hour forex chart was a trend line break to the downside. And price did break the rising trend line, but there was little seller follow-through, which is why a potential 550-pip trading range or rectangle has formed, with resistance at the 2.3030 handle and support at the 2.2480 handle. Price is currently making its way back up to test the resistance area, and if the resistance area holds, then the forex chart pattern will be validated. Do note that stochastic is already indicating potentially overbought conditions, however, so there’s also a chance that forex traders who are bearish on the pair would start to nibble, pushing price further down and invalidating the pattern.
Well, well, well. Looks like the ascending channel on NZD/CAD’s 1-hour forex time frame that we found on Wednesday is still alive. If you were able to find a trade based on Wednesday’s setup, then give yourself a pat in the back and enjoy your 200 pips. For those who missed the ride, just know that price seems to be moving back down again. Conservative forex traders would probably like to wait until price comes close to the bottom of the channel while aggressive traders may be enticed to enter in the hopes that price will reach the bottom, but let me just point out that stochastic has just reached the oversold area, although it’s still pointing down, so the bears may not be quite out of breath just yet. As usual, just 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