Got a couple of retracement plays on pound pairs, plus a potential breakout scenario on AUD/CHF. Take a look!
First up is this neat pullback setup on the 1-hour time frame of Guppy. I probably should have waited for this one instead of jumping in a short position last week!
The pair is in the middle of a correction from its latest slide and has just passed the 38.2% Fibonacci retracement level for a higher pullback. Price could make it all the way back up to the 61.8% Fib at the 147.50 minor psychological mark, descending trend line, and former support level.
Stochastic is already indicating overbought conditions, which means that buyers might be exhausted and ready to let sellers take over.
For the swing traders and pound bulls out there, here’s a neat long-term break-and-retest setup on the daily time frame of GBP/CAD.
Price has already made it all the way down to the area of interest and might be due for a bounce soon since stochastic has pulled up from the oversold region. This suggests that buyers are back in the game and could take the pair up to the swing high or higher.
A break below these Fib levels, however, could confirm that bears are very much in control and that a move back to the swing low around 1.5800 is possible.
Lastly, here’s another longer-term play, this time on the daily time frame of AUD/CHF. Price just bounced off the top of its symmetrical triangle and could be due for a move back to the bottom near .7300 while stochastic heads south.
Sustained bearish momentum could even spur a break lower, which could set off a prolonged slide. This might drag the pair down by the same height as the chart formation, which spans .7100 to .7800.
If buyers regain ground, on the other hand, another test of the resistance around .7500-.7550 could be underway or perhaps even an upside break. Make sure you review our lesson on Trading Breakouts if you’re taking this one!
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