After failing to move higher past the resistance area around the 0.7740 handle, the pair decided to go down and smash up the support area around the 0.7600 major psychological level instead. After breaking past the aforementioned area with sufficient and convincing bearish momentum, the pair lost steam when it reached the price area of significant market interest around the 0.7530 handle, causing price to grind higher back to the support-turned-resistance area around the 0.7600 level, and giving us a textbook break-and-retest setup in the process.
If we apply the Fibonacci tool, we can also see that price seems to be respecting that the 0.7600 area is close to the 38.2% retracement level, and that price has been respecting the said retracement level. We can also see that stochastic is about to reach overbought territory while the moving averages are moving closer together for a potential cross-over into downtrend mode, so forex traders who are bearish on the pair may start to nibble soon.
As I constantly say, one of the most conservative ways to play with a descending channel is to look for shorting opportunities near the channel’s resistance area. And lucky us since that’s where price is currently at, so y’all better start looking. Our technical indicators also look promising since the moving averages have just recently crossed-over into downtrend mode, with the 100 SMA acting as dynamic resistance. Stochastic, meanwhile, is fast approaching the overbought area.
I warned in last Thursday’s intraday forex charts update that GBP/CHF may potentially stage an upside channel breakout. Well, that scenario has occurred. But the bullish momentum quickly got sapped when it reached the 1.4550 minor psychological level, and the pair is grinding back down again. However, price is approaching another price area of interest at 1.4430. And if that price area holds as support, then we may be getting more upside moves in the near future. It’s also worth noting that stochastic is pointing up. Also, price has been closing above the moving averages, which could be a sign of strong bullish interest. 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