On the weekly chart of the Euro vs The US dollar (EURUSD) we see a complete falling wedge. This pattern appears after a steep uptrend that lasted a whole year. Price later consolidated within the chart pattern for a period of 2 years. Bulls then pushed price out of the pattern last week causing a breakout.
The breakout gives us reason to believe that there’s a high probability buyers will control the market going forward. However, as usual we need price action confirmation to ascertain our bias. Usually, a descending wedge in an uptrend is a potential continuation signal but in due time we will get to know whether the buyers will push prices higher possibly targeting the near term level.
On the weekly chart of the British pound versus the Canadian dollar (GBPCAD), there’s a descending channel within which prices have ranged for almost 2 years. The descending channel shows that the main trend is bearish, up until the channel breaks out. Which happened in the week that just concluded.
Sentiment changes from bearish to bullish after a breakout above a descending channel. Confirmation by price will guide us on the right entry point following our bullish bias. Beware that price pulling back to the resistance of the channel before going up higher is a very likely possibility.
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.