This week we’ve got a couple of Fib setups on NZD/JPY & GBP/CHF, and a channel pattern on EUR/AUD ahead of a likely busy week on the forex calendar.
On the four hour chart above of NZD/JPY, we’ve got a simple Fibonacci retracement pattern in the works as the pair has been rallying higher after strong swing move lower from 73.00 to 66.00 over the last couple of months. And it looks like the reversal back to the downside may be confirmed as the bears are already pushing lower from the 38% – 50% Fib area (69.00 – 69.80).
Looking forward, you’ve got an update on New Zealand GDP and the latest monetary policy decision from the Bank of Japan to potentially give the bears more fuel to return this pair back into the downtrend, which would be a solid potential return-on-risk from current levels if using the daily ATR (around 60 pips) and the previous swing low (66.30) as an exit guide.
GBP/CHF is set to see its own action this week with a heavy dose of top tier economic events ahead. We’ll see both an update on U.K. inflation conditions and monetary policy updates from both the Bank of England and the Swiss National Bank later this week. That makes the Fibonacci retracement area on the daily chart of GBP/CHF one to watch as technical sellers are likely to mark the area between 1.2330 – 1.2740 as a potential jump in point. This area is also a broken support-turned-resistance zone, strengthening the argument for resistance to form, and let’s not forget to mention that the stochastic indicator is showing potentially overbought conditions.
At the moment, the odds are stacked in favor of the bears, but with a couple of monetary policy decisions in play, you’ve got to consider the possibility of an upside breakout as well.
Last but not least, let’s check out EUR/AUD on the daily time frame. The pair has been in a nearly textbook rising channel for almost all of 2019, and we’re seeing another retest of the bottom at the moment. We’ve also got the stochastic indicator signaling potentially oversold conditions, so the setup is pretty inviting for the bulls to hop in on this pair at the moment. The action could pick up pretty soon with upcoming top tier events from Australia and China this week, and let’s not forget the broad risk-off sentiment spark by this past weekend’s attack on Saudi Arabia oil production to potentially continue to put pressure risk assets like the Aussie.