The main topic of today’s analysis will be the symmetric triangle pattern, which can be spotted on few currency pairs. The symmetric triangle is a great formation, which can result with a strong directional movement. When the price is still inside of the triangle, it is usually hard to predict the direction. Traders have to remain patient and wait for the breakout. Once the price escapes from this pattern, the direction is set and the trade opportunity emerges.
The first instrument is the Cable – GBPUSD. The price was locked inside the triangle since May and the breakout happened on Monday. It was to the upside, so it gave a buy signal. Yesterday, the price was following that sentiment marching higher. The problem for the buyers was that the Cable had an ultimate resistance ahead, at 1.277. It is a crucial level for the GBPUSD since 2019 and was tested and respected many times. Sellers left no chance here and the price reversed almost instantly after the contact. Wednesday brings us an acceleration in momentum. Technically, it’s pretty normal, apart from the bounce, we see a simple movement of the price aiming at the broken line of the triangle to test it as a support. As long as the price stays above this dynamic support, sentiment is still positive.
The second triangle can be spotted on the USDCAD. Here, it resulted with a breakout to the downside. A weaker USD and higher commodities, helped the CAD gain strength. Along with the breakout of the lower line of the triangle, the price also broke the 1.35 support. As long as the price stays below those two levels, sentiment is negative.
The last instrument is a bit more exotic and, in this case, it did not have the breakout yet. I am talking about the USDMXN, where the price is still defending the lower line of the triangle together with the horizontal support at 22.26. As long as the price stays above the support level, there is no sell signal but the breakout will leave no hope for traders holding long positions.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Oil Loses Momentum As Crude Inventories Increase
- GBP/JPY Price Forecast – British Pound Continues to Find Buyers
- E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3230.75 Sets the Tone
- Gold Price Forecast – Gold Markets Continue to Grind Higher
- Stock Pick Update: July 22 – July 28, 2020
- Gold Price Futures (GC) Technical Analysis – Key Trailing Support Moves Up to $1855.10