Let’s end this week’s intraday charts update with a (potential) double top for GBP/NZD and a channel for GBP/AUD. Hmm. I guess that mean I’m serving up a chart pattern + pound + comdoll triple special today. How cool is that?
Reversal alert, yo! As y’all can see, GBP/NZD tried to push past resistance at 1.8860 twice and failed on both instances. And as a result, a double top pattern appears to be forming.
A double top is a bearish forex chart pattern, so our main directional bias is to the downside. And if a downside breakout does occur past the neckline at 1.8560, then the resulting selloff could possibly last for around 300 pips, based on the height of the pattern.
However, it’s possible that bulls will try to counterattack if or when the pair does to get to the key area of interest at 1.8310, which is only 250 pips away from the neckline. Y’all therefore better keep an eye on how the pair reacts to 1.8310, a’ight?
Conservative traders are advised to wait for a break of the neckline. But for gangsta traders who can’t wait for a break past the neckline, you may wanna wait until that there rising trend line is broken (diagonal purple line) before shorting.
If breakouts ain’t your thing, then you may like GBP/AUD since it has been trending higher recently while trapped inside an ascending channel.
One of the more conservative ways to play an ascending channel is to look for opportunities to go long when the pair is close to the channel’s support area. However, the pair is currently at the channel’s resistance area, so conservative traders may have to wait awhile until the pair moves back down.
As for the more gangsta traders out there who are thinking about going short, just know that stochastic has been milling about the overbought area for some time now, so bear may be coming in soon to push the pair lower. Anyhow, just make sure to practice proper risk management, a’ight?
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.