AUD: NZD - Double Top

AUD: NZD - Double Top

This chart has been drifting for a couple of days after a sharp rally last week.

Although it may be a bit too soon to place a label on the pattern formed by recent sideways action, it's starting to look like one of those situations where swing traders could get some quick action if current support levels are broken.

AUD:NZD CFD - Hourly. Source CMC Tracker

As things currently stand, this pattern looks like a double top. This would be confirmed if the current minor downtrend breaks below the entry trigger.

If we rally off this support, the pattern would start to look more like a descending triangle. It would still be interesting as a reversal set up even if it does not break the support until the 3rd attempt.

Using the technique of placing a stop loss behind resistance back in the body of the pattern, I've noted a potential stop loss level behind the latest minor trend peak. This would apply if a sell trade is triggered by break below the support line soon but may need to be changed if we do more work to the upside before breaking down.

With this sort of set up many traders will wait for price to clear support by a reasonable margin to cut down the risk of being caught by a false break.

If there is a setup, I'll post some follow up thoughts on approaches to a profit objective.