The ascending triangle setup on GBP/USD’s 1-hour chart from yesterday finally broke higher for 180 pips. Yummy! Heck if you jumped in the moment I posted this chart, you would have harvested a whopping 250 pips. 250 pips in less than 24 hours! That’s pretty sweet, huh? In any case, if you were able to profit from this delicious pair, then give yourself a pat on the back.
For today’s play, the pair seems to be hesitating after reaching the major area of interest at 1.2690. If enough sellers jump in to cause a pullback, then the likely pullback area would be at the 50% Fibonacci retracement level, since that retracement level lines up rather nicely with 1.2560, which is another area of interest. Of course, there’s always a chance that the pair may ignore the Fibonacci levels and instead opt to test the triangle broken resistance at 1.2510. Anyhow, just make sure to prepare for both scenarios. Also, make sure to practice proper risk management should you find a trade based on this or any of today’s charts.
Next on today’s stroll down memory lane is that there descending channel from last Tuesday. And as y’all can see, the channel moved higher over 50 pips since last we saw it before attempting an upside channel breakout. However, the breakout attempt was beaten back, forcing the pair to move 190 pips lower to the channel’s support area. By the way, congratulations if you have been playing this profitable pattern.
With that out of the way, the pair is currently testing the channel’s support area, as mentioned earlier. Now would therefore be a good time to look for opportunities to go long. Do note, however, that buying near a descending channel’s support area is a counter-trend setup, so do be extra careful, especially the more conservative forex traders out there. Anyhow, buyers already seem to be jumping in. Moreover, stochastic is already signaling oversold conditions.
Our last stop is Monday’s descending channel for EUR/NZD. We were actually looking to go long on the pair back then, since it was near the channel’s support area. And as y’all can see, the pair used the mid-channel area as a diving board to attempt a downside breakout, moving as much as 160 pips since last we saw it, which is why I always warn that going against the trend is extra risky. However, the breakout got quickly faded and the pair moved over 180 pips higher towards the channel’s resistance area, confirming our original directional bias.
And since the pair is back at the channel’s resistance area, y’all therefore start looking for opportunities to go short. All the more so, since the channel’s resistance area lines up with the 1.5030 handle, which is a price area with very significant market interest, even on the higher time frames. And looking at our technical indicators, we can see that the 200 SMA seems to be acting as dynamic resistance. Stochastic, meanwhile, is already indicating overbought conditions. The only worrying thing here is that the downside channel breakout attempt was defeated, since that may imply strong bullish interest.
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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.