As I always say, one of the more conservative ways to play a descending channel is to look for opportunities to go short near the channel’s resistance area. Unfortunately, the pair is currently milling about just under the mid-channel area, so more conservative traders may wanna sit this one out. For the more aggressive traders, the pair seems to be getting sellers at the mid-channel area because price is currently near the former support area at 0.8790. And that, together with the fact that stochastic is already pointing down and moving away from overbought territory, means that we’ve also got a break-and-retest play on our hands.
GBP/NZD recently violated a falling trend line that has been respected since mid-September of last year. However, the pair soon found sellers at the 2.1320 handle and began pulling back, giving us a simple break-and-retest setup to play with. If we apply our Fibonacci tool, we can see that price seems to respecting the 50% retracement level, which also happens to sit right smack on the 2.0850 minor psychological level. Be careful if you’re planning to go long, though, since stochastic is already indicating overbought conditions while the moving averages are coming closer together for a potential cross-over into downtrend mode.
AUD/NZD smashed past support at the 1.1050 minor psychological level but encountered fresh buyers at the 1.0860 handle and began trading sideways. If price does pull back, the most likely pullback area would be the former support area at the 1.1050 minor psychological level, which also happens to line up rather nicely with the 50% Fibonacci retracement level. 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.