Impressed by the interest in Michael’s Mystery Chart, I initially thought of making this set up a mystery too.
I could become the Crocodile Dundee of the CMC Blog – “That’s not a mystery chart – THAT’S A MYSTERY CHART”.
While as a mystery chart GBP: NZD may be a pretty annoying “degree of difficulty 9.99”, it does have possibilities as a setup so I thought readers may be interested in a “fully disclosed” post.
The 2 recent trend troughs in GBP: NZD are close enough to be a potential double bottom. The 2nd low looks like that typical “retest” behaviour which indicates that the market has gone from a clear downtrend to a more indecisive phase. Previously new buying only came in at distinctly lower lows. Now buyers are coming back at about the same level as before.
The double bottom would be completed by a confirmed break above the peak between the 2 lows.
At the moment price is baulking at that level. If it falls away from here, this situation could end up developing into some other kind of chart pattern e.g. a triple bottom.
There is resistance from an old low just above this double bottom peak. On that basis one approach to an entry strategy would be to wait for price to break past this resistance as well before assuming a new uptrend was clearly under way. Stop entry buy orders can be a good way of implementing this kind of strategy.
The approach shown on this chart is to measure the height of the double bottom pattern and project this from the peak between the 2 lows. I’ve used Tracker’s Fibonacci price tool to do this. It’s the 100% measure on the chart
To begin with, this has been set behind a minor support level back in the body of the double bottom pattern. If an uptrend develops, it can also pay to trail this up behind any new failure points that emerge.
Tracker Order Ticket
The order ticket below shows how this type of strategy can be put into place using Tracker.
As usual, I have used a boundary on the stop entry order to avoid being caught by a gapping market