I’m seeing mixed signals on the 4-hour chart of USD/CAD and a pretty solid downtrend on EUR/GBP.
Which of these are worth trading?
EUR/GBP: Daily
Heads up for this long-term trend pullback on EUR/GBP!
The pair has been cruising inside a descending channel since mid-2021, and it looks like another test of the resistance is in order.
Is the trend still our friend or have we reached the bend at the end?
Moving averages suggest that the selloff could resume soon, as the 100 SMA is below the 200 SMA. Also, the 200 SMA dynamic inflection point lines up with the channel resistance to add to its strength as a ceiling.
The pair is already testing the 100 SMA dynamic resistance that’s right smack in line with the 50% Fib near the mid-channel area of interest. At the same time, Stochastic is approaching the overbought zone to indicate that sellers might return soon.
Better keep your eyes peeled for any reversal candlesticks at these Fib levels since a continuation of the drop could take EUR/GBP back to the swing low at .8285.
USD/CAD: 4-hour
I’m seeing, not one, but TWO reversal patterns on this forex pair!
First off, we’ve got a huge inverted head and shoulders that’s been forming since late last year. USD/CAD seems to be struggling to break above the neckline around the 1.2800 handle, though.
That’s probably why we’re seeing a small double top pattern recently, with price already testing the neckline around the 1.2670 area.
A break below this support level could set off a drop that’s the same height as the double top or roughly 130 pips. The 100 SMA is below the 200 SMA after all, so sellers might have the upper hand right now.
However, Stochastic is dipping into the oversold region to suggest that buyers could take over eventually. A successful attempt to break past the 1.2800 mark could be followed by a rally that’s around 350 pips, so I’d watch out for that, too!
