Looks like the descending channel that we identified last Thursday is still intact, so let’s go ahead and look for more trading opportunities. If life gives ya lemons, make lemon-powered batteries, I say. Anyhow, price is approaching the channel’s resistance area again, but the bullish momentum seems to have run out of steam since the 100 SMA appears to be acting as dynamic resistance. Also, the 200 SMA is above the 100 SMA, which indicates a downtrend. Meanwhile, stochastic is pointing down and moving away from overbought territory, so forex traders who are bearish on the pair may be in control already.
GBP/NZD has been also been grinding lower while inside a descending channel, albeit a rather messy-looking channel. In any case, the moving averages are essentially oscillating, so their signals aren’t that super reliable, but do note that they recently crossed-over into downtrend mode. And while the most conservative way to play a descending channel is to look for shorting opportunities near the forex chart pattern’s resistance area, price seems to have already found resistance at the mid-channel area, with the 200 SMA acting as dynamic resistance to boot. More conservative forex traders should probably sit this one out, however, since stochastic is still pointing up and hasn’t quite reached the overbought region just yet.
This descending channel setup is for longer-term traders since we’re looking at CHF/JPY’s 4-hour time frame. And as y’all can see, the pair has been respecting that there descending channel since early June of last year, which is a really long time. Also note that price recently began making its way up again, but lost momentum around the mid-channel area. Not only that, if we look at our technical indicators, we can see that the moving averages are still indicating a downtrend, with the 200 SMA acting as dynamic support. Moreover, stochastic is currently indicating overbought conditions, but is beginning to point down, which implies that the pair is ready to go back down. 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