GBP/CHF began encountering fresh sellers after surging higher. However, the sellers were unable to stop the pair’s bullish advance, although they were able to slow the pair down. In the process, an ascending channel has clearly emerged. And presently, the pair is making its pair lower while likely gunning for the channel’s support area. However, there’s a chance that the pair may move higher without ever touching the channel’s support area. Stochastic has already reached oversold territory after all. Moreover, the pair already appears to be getting buyers at the mid-channel area. Do note that going long while the pair is still some distance away from the channel’s support area is more risky than usual, though. More conservative forex traders may therefore wanna wait this one out.
Recent price action on EUR/GBP is almost a mirror image of price action on GBP/CHF. You see, EUR/GBP dropped rapidly but its descent began to slow down later. And as y’all can see on that there chart, a descending channel has now formed in the wake of the slower descent. And as I always say, one of the more conservative ways to trade a descending channel is to look for opportunities to go short near the channel’s resistance area. However, the upward swing seems to be hesitating at the mid-channel area. Also, stochastic is already signaling oversold conditions. There’s therefore a chance that the pair may resume going lower instead. 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, alright?
Both setups for GBP/USD and EUR/GBP above are bullish on the pound. But if you’re more bearish or you don’t have a particular bias on the pound, then you may like the setup on GBP/USD. As y’all can see, the pair broke to the downside of an ascending channel that we first discovered last Tuesday. However, bulls were waiting and ambushed the bears, sending the pair higher in an attempt to reenter the channel. The bull’s attempt to get back inside the channel has failed so far, though. And if we apply our Fibonacci tool, we can also see that the pair is currently milling about near the 50% retracement level. For today’s play, we’re looking at two scenarios. The first is that the bulls finally succeed in pushing the pair back into the channel. Stochastic seems to support this scenario since it has already reached the oversold area. As for the second scenario, we’ve got the Fibonacci pullback setup. The moving averages seem to support this, since they recently crossed-over into downtrend mode.
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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.