On this week’s analysis looking at The British Pound vs The US Dollar on the daily timeframe.. We are going to analyze the candlestick formation within a descending channel. This pair has been on a very much sustained downtrend. Therefore it goes without saying that we’re in a bear market. At the moment we’re at a strong support zone. A mother candle has formed at the support zone, followed by multiple inside bars. The last days’ candlestick has broken out above the mother candle.
A close above the mother candle is an indication that the bulls may be coming into this market, invalidating the bearish mother candlestick. Whenever inside bars form, a close either above or below the mother candle will most likely indicate an opportunity. However we should keep in mind that we’re in a bear market. Price action will give us confirmation whether bulls will reverse prices or they will just cause a minor retracement probably to the upper trendline of the channel before bears resume with the downtrend.
On the weekly chart of The Canadian Dollar vs The Swiss Franc, there’s a formation of a triple top, which broke out last week. This weeks’ candlestick after the breakout candle is a dragonfly doji.
Succeeding the breakout of the triple top, our bias is bearish. The upper shadow of the doji shows that price rallied to the neckline but got resisted. This is a sign of a pullback which is visibly seen on a lower timeframe such as the daily. Sellers later came in and pushed price lower but bulls fought back and price closed on the highs. Since doji’s show indecision, we have to wait for further price action to confirm lower prices.