After a topside breakout from the trading range or rectangle that we identified back on Tuesday, the pair got rejected when it reached the 0.7460 price level, giving us a potential break-and-retest setup to play with. The pair is likely to test the resistance-turned-support area around the 0.7400 major psychological level, which happens to be close to the 50% Fibonacci retracement level. As for our technical indicators, the moving averages aren’t really helping much, but stochastic is indicating overbought conditions, so forex traders bearish on the pair may be coming in for a pullback soon.
As I always say, one of the most conservative ways to play a descending channel is to look for selling opportunities near the top of the channel, so better get ready because price is approaching the forex chart pattern’s resistance area. The moving averages have also crossed-over into downtrend mode and it even looks like the 200 SMA could potentially act as dynamic resistance. Stochastic is also in overbought territory already, but it’s still pointing up so euro bulls may not be exhausted 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, okay?
Lastly, I’ve got that there upside breakout from the descending channel on EUR/CAD’s 1-hour forex chart that we found back on Monday. But before that, congratulations are in order for those who found a trading opportunity based on that setup. For today’s play, we are looking at another break-and-retest setup. And if we apply our Fibonacci tool, we can see that the 38.2% and 50% retracement levels are the most likely pullback areas since they’re closest to the breakout point around the 1.5200 major psychological level. The moving averages are still in downtrend mode, however, so be careful since there’s still a chance that price will reenter the descending channel.
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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