Word up, peeps! The chart pattern party is just heating up. And today, I’m serving up a couple more. To be more specific, I’ve got a triangle on NZD/CHF and a rectangle on EUR/USD. Enjoy!
NZD/CHF has been making ever lower peaks recently, which implies that bearish pressure is strong. However, bulls aren’t total pushovers and have entrenched themselves at 0.6320. And if we connect the dots, we can see that a descending triangle pattern has formed on NZD/CHF’s 1-hour chart.
As it says on the tin, a descending triangle is a bearish forex chart pattern, so we’re mainly bearish on the pair. And the way to play is to wait for a clear downside break past 0.6320, ideally on strong bearish momentum.
And looking at our technical indicators, we can see that them moving averages are still in downtrend mode. Moreover, the 100 SMA has also been acting as dynamic resistance for some time now. Stochastic, meanwhile, is pointing down already after a quick stay at the overbought area. They’re therefore leaning more towards a potential downside break.
Of course, there’s always a slim chance that the pair may opt to break to the topside instead. And in the event that such an unlikely scenario plays out, then a break past 0.6370 would be an early signal that bulls are winning. The pair would still need to clear 0.6410 in order to validate a topside break, though.
And if you’re planning to trade within the range, then y’all may wanna start lookin’ for opportunities to go short since the rectangle’s resistance appears to be holding.
However, if the rectangle’s resistance does holds and the pair moves back down towards the channel’s support, then that would also complete a double top pattern. And if that happens then the odds for a downside rectangle breakout increases.
The pair would still need to smash lower past the 1.1500 major psychological level to confirm the downside breakout from the rectangle and the double top. But if the pair does that, then bears will likely be gunning for the area of interest at 1.1310.
As usual, there’s also a chance that a topside rectangle breakout may occur. So just watch out if the pair takes out the 1.1750 minor psychological level on strong bullish momentum.
In any case, y’all just make sure to practice proper risk management as always, a’ight?