Price smashed through resistance at 0.9660 with sufficient and convincing momentum on its third attempt. The pair then abruptly found sellers at 0.9810 and began trading sideways, forming a pretty obvious bullish flag in the process. So, is it time for a breakout? Well, looking at our technical indicators, the moving averages are still in uptrend mode and the 100 SMA even acted as dynamic support for the pairs most recent bounce upwards. Stochastic, meanwhile, is pointing up already, so forex traders who are bullish on the pair may be still be in control. If enough buyers begin piling up, then we may see an upside breakout soon. And in case we do see a breakout, the resulting rally could probably last for around 200 pips since that is roughly the height of the forex chart pattern.
One of the most conservative ways to play a descending channel is to look for resistance and shorting opportunities near the top of the channel, which means that there’s no conservative play to be had on that there chart since price is about to test the bottom of the channel. But for the aggressive forex traders out there, just know price looks like it has already found support and that stochastic is already making its way up from oversold territory.
It took a while but price finally managed to push past the mid-channel area only to find resistance a price area of very significant market interest at the 90.00 very major psychological level. This could mean that price may be making its way back down soon, but it could also mean that price will move past for a test of the channel’s top, especially since stochastic is already pointing up. But it could also mean a potential upside channel breakout since stops above 90.00 may be triggered if price keeps moving higher. In any case, 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