Price validated that double bottom on AUD/USD’s 1-hour forex chart that we identified yesterday, giving us some sweet pips. AUD/USD ain’t done giving yet, though, since we now have that there descending channel to play with. Anyhow, price just bounced off the the channel’s resistance and is currently making its way back down. Also stochastic is now pointing down and moving away from overbought territory, so forex traders bearish on the pair are apparently in control already. Be careful when price reached the former neckline around the 0.7075 handle, though, since there’s a chance that price will get rejected.
As I always say, the most conservative way to play an ascending channel is to look for support near the bottom of the channel. And lucky us since that’s where price is currently at. Looking at our technical indicators, stochastic is already indicating oversold conditions, so bulls may be piling in already. The moving averages, meanwhile, are still in downtrend mode, but pay them no mind since they’re actually oscillating if you zoom out further. In any case, make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
I first noticed this descending channel on NZD/USD’s 1-hour forex time frame when Forex Gump mentioned it in his Jobs Matchup for the U.S. and New Zealand from last week. And as y’all can see, the pair briefly broke out to the downside, but support at the 0.6500 major psychological level held and the pair began trading sideways right back into the channel. So, where to from here? Well, price is about to test the 0.6500 price level again, and I see two main scenarios here: (1) price respects the 0.6500 level, which happens to sit right smack on the bottom of the channel, and begins moving higher, or (2) price pushes past support to continue the downtrend, as indicated by the moving averages. Of course, I could be wrong and price could continue trading sideways instead.
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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