Mind the gap, ladies and gents! This week I’m looking at a mix of short-term and long-term plays while waiting for the gaps to get filled.
First up is an update on the GBP/NZD long-term channel I’ve been watching for quite some time. Pound bears showed their supremacy by finally pushing for a break below the channel bottom, indicating that a long-term slide may be in the works.
However, stochastic has been cruising around the oversold levels for quite some time, which suggests that sellers could use a break and let buyers take over for a bit. In that case, the pair might still close the weekend gap and retest the broken channel bottom before heading further south.
Next up is this double top reversal pattern on the 4-hour time frame of GBP/CHF. Price seems to have already broken below the neckline support to confirm that a selloff is in the works.
Stochastic is still heading higher, though, so sellers might wait for overbought conditions before stepping on the gas. Once that happens, the pair could slide by the same height as the chart pattern, which spans 1.2775 to 1.3125 or around 350 pips.
Anyone gutsy enough to catch a falling knife? Thanks to its weekend gap, GBP/AUD has tumbled to the bottom of a descending channel forming on its 4-hour time frame, so a risky countertrend play is presenting itself.
They say that all gaps get filled, so a bounce back to the mid-channel area of interest around the 1.7350 minor psychological mark may yield some quick pips. Stochastic is dipping into the oversold region anyway, which suggests that bears could use a break and let buyers take the wheel.
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