Yesterday it was the triangle and today it’s the wedge setup on the hourly GBPAUD chart. Something that we have discussed repeatedly in the past is the need to look at higher timeframes before making your trading decisions and this chart is no different. Let’s though focus on the key timeframe for this one which is 60 minutes:
On this chart you have what I would suggest to be decent bullish momentum. I am drawing that conclusion based on the slope of the 200 period MA. If you take a look at the daily though I would suggest the market is bullish but overall we are stuck in a broad oscillation. Happily though there is plenty of room to move within the range so nothing holding back the hourly trader.
You can see on the hourly chart there has been a false break to the upside on this formation so take care on the entry. When you measure the height of the pattern this will give you your initial price target but if a decent breakout occurs to upside I would look to this as a potential trend continuation trade – which if it happens naturally has a lot more potential that just trading the height of the pattern. Something to consider in any case.