Ranges, channels and Fibs! We’ve got a diverse set of setups this week for all of you currency cross fiends!
First up is this ranging pattern on AUD/JPY. For the past three months, this market has traded pretty steadily sideways between 77.50 to 79.50 and is now again retesting to top of the range this week.
Without top tier catalysts on the calendar for both the Aussie and yen, odds are pretty good that the top of the range could hold. With a daily ATR of around 65 pips, resistance could come as high as the 78.00 major psychological area, and if it does, look for reversal patterns that could draw in sellers back to push this pair to the bottom of the range over 200 pips away.
GBP/CAD has been grinding higher in a channel since the start of the year, but the bulls hit a pretty big roadblock around the top of the channel around 1.7700 – 1.7800 in March. Since then, the pair has pulled back lower and is nearly testing the bottom of the rising channel once again around the 1.7200 to 1.7300 range.
Look for bullish reversal patterns and the stochastic indicator to come out of oversold conditions before taking this pair out of your watchlist and into trade idea mode. And keep in mind that this is a big moving pair with a daily ATR of over 170 pips, so plan your exits accordingly if you’re going to take a shot on this pair.
And last but not least, the euro has got one of the only top tier events this week in the form of the European Central Bank’s latest monetary policy statement. Volatility should pick up and and easily reach the daily ATR of around 40 pips during this event, and if you’re generally a euro bear, this Fibonacci setup on EUR/CHF is definitely one to watch.
After falling from 1.1380 to 1.1160 in the last couple of weeks, the pair has managed to bounce to the 38% Fibonacci retracement area. The stochastic indicator is nearly back in overbought territory, so this bounce could be running short of breath sometime soon. If you’re bearish, look for reversal patterns between the 1.1250 – 1.1300 handles and for stochastic to come out of overbought territory before moving this pair from watchlist to trade mode.