Y’all can still recall that there descending channel for EUR/USD that we first identified on Tuesday? Back then, the pair has just bounced off the channel’s resistance area and making its way down. I therefore told y’all to start lookin’ for an opportunity to go short and quick, since the pair will likely be gunning for 1.0530 next, if 1.0590 gives way. Well that’s exactly how it played out, dawg. So to those of ya who were able to get on that 60+ pip ride, give yo selves a pat on the back.
However, I also told y’all to be ready to bail or switch trading bias should the pair suddenly stage an upside breakout by snapping higher to 1.0660, since that means that them bulls are likely in control and shooting for 1.0790. Well, that scenario played out as well, so give yo self another pat on the back if ya were able to ride that.
Anyhow, price seems to have hesitated at 1.0660. We’re still waiting for the pair to shoot higher to 1.0790, though. And an upside scenario seems favorable for now, given that stochastic is already indicating oversold conditions and all that. Moreover, the pair has been closing above them moving averages, which indicates strong bullish interest. In addition, them moving averages look like they’re moving closer together in order to cross-over into uptrend mode. Do know, however, that the tenacity of them bears means that there’s a small chance they may try to push the pair lower. And if we apply our Fibonacci tool, we can see that 1.0660 sits between the 50% and 38.2% retracement levels, so them bears likely have their eyes on ’em. The bears need to clear both 1.0590 and 1.0530, though, and bulls would likely be waiting on both price levels.
As y’all can see on that there chart, EUR/CHF broke past support at 1.0680. However, them bulls have entrenched themselves at 1.0640, a price area with significant market interest, even on the higher time frames. Just switch to a daily or weekly and you’ll see. Anyhow, them bears ain’t giving up, though, since they kept pushing the pair down, resulting in lower peaks or high. And if we connect them peaks and mark the bulls’ entrenchment at 1.0640, we can see that a descending triangle pattern has formed.
A descending triangle is a bearish triangle, so our main directional bias is to the downside. And if a downside breakout does occur, then the pair may have enough steam for a hundred pip move. However, stochastic is already signaling oversold conditions and all that, so there’s a chance that the pair may break to the topside instead. Y’all may therefore wanna prepare for such a scenario as well. Know what I’m sayin? In any case, just make sure to practice proper risk management as usual, a’ight?
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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.