Not much happening in the way of event risk or price action today. However we did see AUDCAD retest former resistance and form a bullish pin bar in the process.
We’ve been talking about this pair since last week as we watched it form a bullish wedge on the 4 hour chart. The market broke resistance on Friday signaling that a retest was in order. That retest occurred today as the U.S. session began, almost to the pip.
From here I would expect some sideways price action as there isn’t much in the way of event risk over the next 24 hours. However given Friday’s breakout and today’s retest I am bullish on this pair as long as we stay above former trend line resistance.
I would, however, like to see the market stay above 1.0148 in order to maintain bullish momentum. The next key resistance doesn’t appear to come in until 1.023 to 1.025.
GBPJPY has been moving sideways for a while now which doesn’t interested me. However there are two aspects to this sideways movement that I like and which could provide us with a trade setup.
- The pair is holding above key support at 172.80
- The pair has formed a trade-able consolidation pattern
What do I mean by “trade-able consolidation pattern”? Well, as price action traders we’re always looking to put the odds in our favor and trade setups that have some type of confirmation. Whether it’s a price action signal or a breakout and retest from consolidation.
Before we go too far on that subject, let’s first talk about this key daily level. As you can see from the chart below, the market is still holding above 172.80.
As long as the market continues to close above this level I will favor the upside.
Now to the consolidation pattern. Notice how we have several touches off of this short-term trend line. Although there isn’t much to do at the moment, a break to the upside and retest as support could provide us with a trade setup that has a great risk to reward ratio.
For now we’ll just have to keep an eye on how the market responds to this level over the next 24 hours.