The purpose of this post is simple; Watch this space as I suspect a downside break is building.
Price continues to coil up with a Symmetrical triangle, which most textbooks will tell you are a continuation pattern. Whilst they have a tendency to be continuation patterns (bullish in this instance) I have found the more obvious ones tend NOT to be continuation patterns.
If we are to see a bearish break then we can just treat this as a break of trendline and trade on the short side, accordingly.
If we are to see a downside break this session the chances are it will not be as bearish as yesterday’s close. As demonstrated by the percentage indicator (bottom of chart) we tend to find that extremely volatile days are rarely followed by the consecutive day of volatility. Whilst this does not help with subsequent direction it means we can make the basic assumption that any bearish follow through will not likely be of the same magnitude. Also the catalysts are not there as tonight’s focus is all on US data. Therefor we could even find price action relatively subdued compared to USD crosses.
So the purpose of this post is simple; Watch this space as I suspect a downside break is building. We may however need to wait until next week when presented with RBA Cash rate decision for the eventual catalyst. Rates on hold will likely see a bearish break for GBPAUD whilst a rate cut should see it recycle back inside the triangle as the trendline holds.