Here’s a textbook setup on AUD/NZD that’s giving me some high probability vibes ahead of the weekend. On the one hour chart above, we can see the pair made a nice move higher, but finding resistance right at the 100 and 200 simple moving averages. This new resistance behavior pretty much confirms that we’ve got a fresh channel on our hands and that the possible next move is the bottom of the channel. Stochastic is also in overbought territory adding to the argument that sellers are likely in control for now.
Tight triangle consolidation throughout October in Guppy seems to finally have broken, and with broad risk sentiment likely to lift the yen in the short-term, odds are that this could be a true breakout rather than a fakeout.
We’ve already gotten a strong move to the downside, but with the major swing low of around 124.85 still a ways away, it’s still a decent R:R short-term opportunity. For you conservative traders out there, a pullback to the broken rising trendline is good bet to potentially find resistance as it lines up with the 100 and 200 moving averages.
Last but not least for the week, we’ve got another consolidation breakout, this time on the USD/CHF one hour chart. The move and sentiment is still fresh so it could find momentum higher from here, but with the weekend quickly approaching and the stochastic indicator showing overbought conditions, there’s a chance for a pullback on profit taking.
The next move for short-term traders is to look for a pullback to the broken resistance area around the major psychological level of .9900 and see if buyers can once again hold the line before hopping in on the longer-term trend higher.
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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.