Last Thursday, I told y’all that it’s likely gonna be make-or-break time for USD/JPY. Specifically, we were looking for a break past that there falling trend line (diagonal orange line). And, well, we got a breakout all right. Price was at 114.20 when I posted the chart. And as y’all can see, the pair surged for almost 190 pips since last we saw it, so congratulations to those of ya who were able to jump in.
For today’s play, price is beginning to retrace, so we’re looking for a potential pullback area. And applying our handy Fibonacci tool, we can see that the 50% retracement level looks like a good retracement area to watch. All the more so, since it sits right smack on 114.60, which happens to be a price area with significant market interest. Do be reminded that the pair is inside an ascending channel, though. It is therefore also possible that the pair will test the channel’s support area before climbing higher.
We also had a setup for NZD/USD’s 1-hour chart last Thursday. If y’all can no longer recall, the triangle pattern that we identified last Monday broke to the topside. However, the pair was pulling back last Thursday, so we had a Fibonacci setup in play. But I also warned back then that there’s a chance that the pair may go even lower to 0.7120 because it’s closer to the breakout point. Well, as y’all can see on that there chart, the pair did find support almost exactly at 0.7120 before climbing higher for about 80 pips.
Anyway, if we take the most recent price action into account, we can see that the pair has formed a new ascending channel pattern for us to play with. And presently, the pair seems to be gunning for the channel’s resistance area. However, price is approaching resistance at 0.7220. Stochastic, meanwhile, is already signaling overbought conditions. There is therefore a chance that the pair may be moving back down again sooner or later. Do note, however, that shorting either at the channel’s resistance area or at 0.7220 is a counter-trend play, which makes it extra risky. More conservative forex traders may therefore wanna sit this one out until price is close to the channel’s support area again.
GBP/CHF is truly the gift that keeps on giving! We’ve been playing that there ascending channel since November 22 and we have harvested literally hundreds of pips since then. Anyhow, we last checked up on the channel last Wednesday. Back then, the pair was milling about near the channel’s support area at 1.2700, so our main directional bias was to the upside. And since then, the pair has climbed higher for about 160 pips, so that’s another bountiful harvest from this pair.
The pair is still some distance away from the channel’s resistance area. In addition, price seems to be hugging the channel’s support area. However, the pair has already reached the area of interest at 1.2860 while stochastic has reached overbought territory. There are therefore two major scenarios here: (1) the pair continues to respect the channel by moving higher past 1.2860, or (2) price gets rejected and the bears attempt a downside channel breakout. Both scenarios are likely at this point, so you may wanna prepare for both. And as usual, just make sure to practice proper risk management, 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.