After a steady pullback, evidence is mounting for a trend continuation thanks to price rejecting a trend line as well as a horizontal level of support. This could be the zone where renewed buying pressure potentially pushes price higher.
The cross-pair GBPNOK has been trending upwards for just over a year (since February 2013) and has made decisive higher peaks and higher troughs (“higher highs and higher lows”) on the weekly timeframe. The higher troughs conform to a steep trend-line which price had just rejected. This point of rejection overlaps with a horizontal level of support at 9.8427.
Price has thus arrived at a confluence of technical levels, adding weight to the argument that price could continue to the upside and make a higher high, as it has done three time in its upward trend so far.
Furthermore, GBPUSD is trending upwards on the weekly, reflecting the increasing strength of the British Pound against the US Dollar. By comparison, the US Dollar is continuing to gain in strength against the Norwegian Krone, as is too reflected in its upward trend on the weekly chart. This makes the British Pound the strongest out of the three and Norwegian Krone the weakest in comparison, thus adding weight to the argument that there is more upside potential for GBPNOK.
The open and close in the top half of the bar validates it as a bonafide pin bar.
They will wait for the market to come to them. If they are triggered into the trade by the end of the week then they will subsequently trail their stop loss behind the low of every second buyer bars on the same time frame they are trading (ie: the weekly chart).
A potential target for this trade could be just below the previous swing high for a higher probability outcome rather than targeting a “higher high”.
If traders are not triggered into the trade by the end of the week, they will typically delete their orders as the market has indicated that there is no momentum to the upside.
As this trade is a weekly set-up, reaching the target will take time (potentially weeks, if not months!), so traders should consider this more of a long-term “investment-style” trade.
The cross-pair GBPNOK has been trending upwards for just over a year (since February 2013) and has made decisive higher peaks and higher troughs (“higher highs and higher lows”) on the weekly timeframe. The higher troughs conform to a steep trend-line which price had just rejected. This point of rejection overlaps with a horizontal level of support at 9.8427.
Price has thus arrived at a confluence of technical levels, adding weight to the argument that price could continue to the upside and make a higher high, as it has done three time in its upward trend so far.
Furthermore, GBPUSD is trending upwards on the weekly, reflecting the increasing strength of the British Pound against the US Dollar. By comparison, the US Dollar is continuing to gain in strength against the Norwegian Krone, as is too reflected in its upward trend on the weekly chart. This makes the British Pound the strongest out of the three and Norwegian Krone the weakest in comparison, thus adding weight to the argument that there is more upside potential for GBPNOK.
A possible signal for a long position
Last week’s close as bullish pin bar reversal rejecting both trend line and horizontal level is a good sign that bulls have defended this level, causing price to “whiplash” off it.The open and close in the top half of the bar validates it as a bonafide pin bar.
How to trade this set-up
Risking a small amount of their trading account, (ie: no more than 2%) many traders will simply place a buy order at the high of last week’s bullish pin bar reversal (adding the spread the broker has quoted them for this pair plus an extra pip) with their protective stop loss below the low of last week’s bar (subtracting spread and an additional pip).They will wait for the market to come to them. If they are triggered into the trade by the end of the week then they will subsequently trail their stop loss behind the low of every second buyer bars on the same time frame they are trading (ie: the weekly chart).
A potential target for this trade could be just below the previous swing high for a higher probability outcome rather than targeting a “higher high”.
If traders are not triggered into the trade by the end of the week, they will typically delete their orders as the market has indicated that there is no momentum to the upside.
As this trade is a weekly set-up, reaching the target will take time (potentially weeks, if not months!), so traders should consider this more of a long-term “investment-style” trade.
Recommended Content
Editors’ Picks
AUD/USD holds hot Australian CPI-led gains above 0.6500
AUD/USD consolidates hot Australian CPI data-led strong gains above 0.6500 in early Europe on Wednesday. The Australian CPI rose 1% in QoQ in Q1 against the 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY sticks to 34-year high near 154.90 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price struggles to lure buyers amid positive risk tone, reduced Fed rate cut bets
Gold price lacks follow-through buying and is influenced by a combination of diverging forces. Easing geopolitical tensions continue to undermine demand for the safe-haven precious metal. Tuesday’s dismal US PMIs weigh on the USD and lend support ahead of the key US macro data.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.