Want more price action setups? Join our Exclusive Member’s Community
As we move into the second day of the first full week of trading in the new year, the markets continue to jockey for position. This is normal behavior as the first two weeks of a new year often produce erratic movements.
That said, there are a few markets we can keep an eye on over the next week or two. The first pair we’re going to look at is focused on a multi-year trend line that dates back to April of 2013. The pair I’m referring to is GBPNZD.
A look at the weekly chart shows the trend line support mentioned above. However it also shows trend line resistance, indicating that the pair is working its way into a wedge pattern.
GBPNZD weekly chart
From here we would need to see a break of either wedge support or resistance. Given the recent pressure being put on the support level, I’m biased to think that we’ll get a downside break.
It’s important to note that the 1.9618 key horizontal level is just below wedge support. Therefore it would be prudent to wait for a break of this key horizontal level before considering a short opportunity.
Summary: Watch for a break of wedge support followed by a break of the 1.9618 key horizontal level and then watch for bearish price action to set up a short opportunity. The next key support levels come in at 1.9360 and 1.8990.