USD/CAD has been moving higher while bouncing up and down inside an ascending channel since early December. Presently, price seems to be milling about near the top of the channel while stochastic is already indicating overbought conditions, so forex traders who are bearish on the pair may be jumping in already and the pair may be moving back down soon. Such a setup is a counter trend setup, though, given that price action and the moving averages are still indicating an uptrend, so this setup is only for aggressive forex traders.
EUR/CAD has been trading sideways while trapped inside a 170-pip trading range or rectangle, with resistance at the 1.5150 minor psychological level and support at the 1.4980 handle. Price just recently bounced off the rectangle’s resistance level and stochastic is already in oversold territory, so euro bears may be taking over soon. Do note that stochastic is still pointing up, though, so forex traders who are bullish on the pair may not be exhausted just yet. Also, the 100 SMA could potentially act as dynamic support for a possible upside breakout.
One of the most conservative ways to play an ascending channel is to look for support and buying opportunities near the bottom of the channel. And price is slowly grinding ever lower for a potential test of the channel’s bottom, so a buying opportunity may become available soon. Stochastic is indicating overbought conditions, however, and price action indicates strong selling interest, so there’s a small chance for a downside breakout. 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