Two months ago we analyzed the Australian Dollar versus the New Zealand Dollar (AUDNZD) pair on the weekly chart. The scenario then was a double bottom breakout facing some resistance at a long term trendline – (see weekly analysis of 30th-4th Oct for more information). We have a different scenario now, seeing that the main trend is still a downtrend lasting 2 years 4 months, of which is no surprise since price is trading within a descending channel. On the upper boundary of the channel which serves as our resistance there’s a double top which has broken out below.
The double bottom breakout at our resistance zone is a clear indication of bearish activity. Chances are that we may see lower prices in the near future. However we shouldn’t ignore the fact that we’re in a descending channel and price may also breakout above. We sit tight and let price action do the heavy lifting for us as it confirms entries.
Looking at the weekly chart of the US Dollar vs the Swiss Franc pair (USDCHF), there’s the formation of an ascending channel within a down trend that began in April this year. In the month of August, price bottomed and the bulls kicked off the rally. The uptrend has occurred within an ascending channel.
We know that price is supported (at the lower boundary) and resisted (at the upper boundary) of the channel. So it’s safe to say the bulls are in control of the market as long as price stays within the channel. The most recent candlestick shows rejection of the lower prices at the support level, because it’s a bullish engulfing. Further price action will be our best guide to know whether the uptrend will continue or if bears may come in and cause a breakout below the channel.
Disclaimer: This analysis is for educational and general information only and not advice or a recommendation to trade or invest. Do your own research/analysis and don’t blindly enter trades based on the analysis.