This week we revisit the pair of GBPNZD that we covered in last week’s analysis. At the time, price was trading in an ascending channel which is an indication of bullish dominance. The Doji followed by the Marubozu gave us a bullish bias, and we can testify that the rally continued. Currently price is at our major resistance zone with the formation of a pin bar.
We will be keen to watch what happens next, that is if price will reverse at the resistance level of price 2.009, or if the buyers have enough pressure to break the resistance level. In the case of a reversal, we will watch out for a confirmation signal such as an Engulfing.
A Descending Channel formation on the weekly timeframe has come to our attention. This pattern can act as a reversal or continuation signal depending on the trend. Price was in an uptrend 2 years ago, before consolidating in a falling wedge. The last candlestick formed was a Doji which also happens to be an inside bar.
A breakout of the Wedge will give us a clear direction on where price is likely head next. Since the breakout has not happened, we sit on our hands. The Inside Bar is a potential continuation signal following the bullish candle. At the same time, the Doji shows us indecision. Patience is needed to ascertain whether price will breakout on the upside or be resisted and trade within the wedge.