NZD/JPY recently pulled back higher after a bearish move in January, and it looks like that the Fibs and 200 moving average was that exhaustion point of the bounce. The pair has already made it’s way lower, and if you missed it, don’t fret because the risk-to-reward potential at the previous swing low still looks favorable if the bears stay in control. The stochastic indicator is showing potentially short-term oversold conditions, so if you’re a little uneasy with jumping in at market, there may be a bounce in the cards coming up for a better entry price.
CAD/JPY’s 4-hour chart looks nearly identical to NZD/JPY above, with a slight difference in that it’s much closer to the 200 moving average, giving it a higher potential for sellers to jump in if risk aversion sentiment continues. The potential risk-to-reward to the previous swing low around 79.00 is also more favorable than NZD/JPY, which makes it a serious setup to consider if you think oil and risk assets still have a ways to go to the downside.
To diversify my portfolio of setups, I like this range on GBP/CAD that has been going on since mid-2015. It plays into the continued bearish sentiment on oil and the Canadian dollar, and it fits those forex traders who feel that the British pound’s broad weakness may be overdone. Again, it’s another solid risk-to-reward when targeting the mid-range or the top, but we might want to hold off on jumping in a potentially long play as the stochastic indicator is showing overbought conditions on the recent bounce. A test of the major psychological and previous support level of 1.9900 may not be much further away.
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?
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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