We spoke yesterday about the GBP/USD wedge that saw price coiling up nicely, and I couldn’t go past featuring the continued price action to end the week.
First up, let’s take a look at what we said yesterday:
Zooming into any of the intraday charts, you can see that price is coiling into a wedge pattern:
Seeing as though price is right smack bang in the middle of the daily range, the direction on which to trade this pattern isn’t clear. Do you view it as a continuation pattern because price has rallied off support and this is merely a pause before a further push higher, or do you take the view that it is simply a turn as we get closer to the top of the range?
Yesterday’s price action goes some way toward answering the question:
As you can see, price shot up, tapped the upper trend line of the wedge and was rejected back down.
Zoom into an even lower time frame chart and you can see just how violent the rejection was.
Does price continue to reject from here and break the lower bound of the wedge? Tweet your scenario to @VantageFX on Twitter.
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Dane Williams – @VantageFX
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Source: Vantage FX Blog