CAD/CHF has been trending ever higher since early April, but seems to have difficulty moving past resistance at 0.7730. However, the bulls are not ready to give up yet, with the 0.7670 handle now emerging as clear support. All the while, price kept trading sideways, ultimately forming a tight 60-pip trading range or rectangle for us to play with. If you’re planning to trade within the range, just know that price is presently making its way higher for a possible test of resistance at 0.7730. But if you’re looking for a breakout play, then the path of least resistance seems to be to the upside since stochastic is still a long way away from overbought territory while the moving averages are signalling a healthy uptrend.
Price just recently bounced off that there descending channel’s support area. And while it’s still some distance away from the channel’s resistance area, the pair has already encountered sellers at the 0.8760 handle, which is a price area with significant market interest, even on the higher time frames. This gives us two scenarios: (1) price violates the 0.8760 level and moves higher or (2) price respects 0.8760 and uses that price level as a launching pad to move lower (or even a possible downside channel breakout), especially since stochastic is already indicating overbought conditions. Both scenarios are aggressive plays, though, so more conservative traders may wanna sit this one out.
AUD/CAD moved with great and convincing bearish momentum before suddenly skidding to a halt and consolidating when it reached the 0.9550 minor psychological level. In the process, a possible bearish flag has formed. If the flag is validated, the resulting down move could potentially last for around 230 pips, based on the height of the flag and its pole. Anyhow, 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.