As I always say, 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 conservative forex traders should wait for a bit or sit this one out since price is currently at the mid-channel area. Also, do note that there’s a chance for an upside channel breakout since stochastic is now moving back up from oversold territory. In addition, price is approaching the 1.9900 major psychological level, which is a price area wherein the pair’s bearish momentum was just recently blunted. If that area holds, then there’s a good chance that a double bottom will form, which will reinforce the possibility of an upside channel breakout.
AUD/CAD has been grinding ever lower while bouncing around inside a descending channel since late January. Price is currently milling about above the mid-channel area, using the mid-channel area as support. The moving averages are still in downtrend mode, so our main directional bias is still to the downside. Also, price seems to be using the 100 SMA as dynamic resistance. However, do note that stochastic is moving up without touching down on the oversold area. This implies that bullish interest is strong on the pair and that an upside channel breakout is a possibility.
The final item for today’s channel + Loonie double special is that there descending channel on EUR/CAD’s 1-hour forex chart. Price is currently near the top of the forex chart pattern. However, it’s rather worrying that price is hugging the top of the channel since that may imply that forex traders bullish on the pair are trying their best to push price higher for a possible upside breakout. The moving averages are still in downtrend mode, though, and stochastic is just about to reach the overbought area, so sellers may be enticed to start coming in soon enough. 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, okay?
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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