Forex Top 3 Chart Setups: Theme of the Day is Down
Mark Whistler is the founder of www.WallStreetRockStar.com and is the author of multiple books on trading. Mark’s newest book, The Swing Trader’s Bible – co-authored with CNBC/Fox News regular guest Matt McCall – will be on shelves in late summer, 2008. In addition, Mark also writes regularly for TraderDaily.com and Investopedia.com.
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Top Chart Setup #1: U.S. Dollar has room to fall against yen
Taking a look at the USD/JPY, we see the pair still has room to fall on the downside, before hitting key support of the 50% and 61.8% Fibonacci Retracements of the relative range. While a short-term bounce could show, traders may want to look for downside into 104.50 and 104.16 areas, before considering a reversal.
Top Chart Setup #2: Australian-Bears on the Move
Taking a peek at the 4-hour chart of the AUD/USD, we see that the pair has been trending down since May 27th. Yesterday evening, the Australian dollar hit descending support of the relative channel, where bulls began to resurface. Looking forward, traders may want to look for buying momentum to stall as the pair runs into descending resistance in the 0.9560 and .09680 areas. Conversely an extended move above 0.9600 could have bulls looking for a larger reversal, though with crude losing steam, sellers may certainly step in with force, as the whole number approaches.
Another important point to note, the daily chart (not shown) displays the AUD/USD trading on support of the 20-period moving average. At the end of the day, should 0.9500 give way, the event would trigger a breakdown on both daily and intraday charts.
Top Chart Setup #3: Pound Descending with Slowing Economy
The pound continues to struggle as the UK economy seemingly weakens by the day. Looking purely at technicals; however, the daily chart shows there’s still plenty of room to run on the downside, especially if bears are able to breach median descending support in the 1.9650 area. Moreover, at last glance sellers had actually broken below the aforementioned critical level and are now likely eyeing whole number support at 1.9600. While the GBP/USD might not be able to take out lows during Monday’s session, traders will want to keep an eye on the daily low, which could bring momentum bears in off the fence, should today’s bottom be taken out.
