Back on Tuesday, we observed that CHF/JPY was still hugging that there ascending channel’s support area. I therefore told y’all to start looking for opportunities to go long. And since then, the pair has moved higher for about 160 pips. Delicious! However, the pair has reached the 115.20 handle, which is a price area with significant market interest, even on the higher time frames. The pair already got rejected once, but the rejection was not so severe. There are therefore two major scenarios here: (1) price continues to respect the channel and climbs past 115.20, or (2) the bears stage a downside channel breakout.
Looking at our technical indicators, stochastic is about to enter oversold territory while the moving averages are still in uptrend mode. They therefore seem to support the first scenario for now. However, the fact that the pair has been moving higher without quite reaching the channel’s resistance area may be a sign that bullish momentum is losing steam. Do note, however, that even if bears do stage a downside breakout, they still need to smash past 113.20. Otherwise,the breakout may be premature, and the bulls may then attempt to push the pair back into the channel.
Looks like the bullish pennant on AUD/JPY’s 1-hour chart finally broke to the topside. If y’all can still recall, we were waiting for an opportunity to long on that pair back on Wednesday. We were actually hoping for a 150-pip move, but as y’all can see, the pair moved higher for about a hundred pips before getting repulsed at 87.50. Hopefully, you were able to preserve some of your gains.
Anyhow, the pair is presently making its way lower. The uptrend is still valid while stochastic is signaling oversold conditions, however. We’re therefore looking for an opportunity to go long again. And using our handy Fibonacci tool, we can see that the 50% Fibonacci retracement level looks like a good area to watch. All the more so, since it lines up rather nicely with the 86.10 handle. Moreover, the 200 SMA may act as dynamic resistance if or when the pair does get there. A strong break past 86.10 means that all bets are off, though, since a strong break there could mean a trend change.
That there channel setup is also from Wednesday. And back then we had two scenarios in mind: (1) price breaks 122.80 and continues respecting the channel, or (2) price attempts a downside channel breakout. And, well, the first scenario apparently played out. The pair is still close to the channel’s support area, so those who missed the breakout may still find an opportunity to go long. Just note, however, that momentum seems rather weak for a breakout. A downside channel breakout is therefore still a possibility, so y’all may therefore also want to plan for such a scenario. And as always, 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.