One of the most conservative ways to play with a descending channel is to look for shorting opportunities near the top of the channel. And lucky us since that’s where price is currently milling about. Be extra cautious, however, since stochastic is already pointing up and moving away from the oversold region while the moving averages have recently crossed-over into uptrend mode, which hints at strong bullish interest and a possible upside channel breakout.
Is GBP/CAD in for more downside moves? Well, there seems to be a high probability since a descending triangle has formed on its 1-hour time frame. Anyhow, the height of the triangle’s base is around 400 pips, so a potential selloff could last for the same amount should support around the 1.9910 handle be broken. However, do note that all triangle forex chart patterns have a tendency to break in either direction, so make sure to plan for a potential upside breakout as well, especially since stochastic is already indicating oversold conditions.
NZD/CAD ain’t the only one grinding lower while trapped inside a descending channel since USD/CAD is bouncing around inside a descending channel, too. Looking at our technical indicators, the moving averages are showing a very healthy downtrend, with the 200 SMA currently acting as dynamic resistance. Stochastic is a bit worrying, however, since it’s currently making its way higher, so forex traders who are bullish on the pair may be taking over for a potential upside 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, 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