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The coming week promises to be a heavy-hitter with key events on tap such as NFPs, ECB and RBA. These events will produce increased volatility across the Forex market. With this in mind, be sure to double check your event calendar before entering a setup and even scale back your position sizing if necessary.
Now for the setups…
The first setup I want to discuss going into the new week is the wedge pattern that has been forming on the GBPNZD 4 hour chart since late January. Although this pattern has formed after coming off a large rally, I’m hesitant to call this a bullish pattern just yet as we have a major resistance level just above at 2.1050.
With that in mind, it’s important to remain patient and wait for the market to break either support or resistance before considering an entry. A break to the downside would prompt a move to key support at 2.0080, which is the 50% retrace from the January 2015 lows to the February 2015 highs. Such a move would also close the weekend gap from January 23, 2015.
Alternatively, a break of wedge resistance would bring about a retest of weekly resistance at 2.1050. This level can be seen acting as both support and resistance since 2010.
Summary: Wait for a 4 hour close below or above wedge support or resistance respectively and then watch for a retest of the broken level to trigger an entry. Support comes in at 2.0080 while resistance resides at 2.1050.
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