XAU/GBP – Bat Pattern
The EUR/GBP currency has broken out from the uptrend channel and strongly moved to the 0.86527 level.
It is a level where the price had problems in the past to break above. And it is at a level where the price bounced back down when it was reached.
Now the price reached the level strongly which is indication the price could try to break above on daily time frame.
We can see the bearish candle as a bounce from the resistance level and now a bullish candle that is forming.
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We have a bearish Bat pattern suggesting move down right around current resistance level.
Potential reversal zone shows the area where the supply zone is so we need to wait for a clean bearish signal.
The price does not have too many bearish signals around the current resistance level so we need to stay cautious with these patterns.
The entry level at 0.8678 is much better to wait than to enter inside the potential reversal zone or right at the current level. The reason is that there are not too many signals backing up the bearish pattern.
Stop loss is right at the upper resistance level inside the supply zone around that level. So it is below horizontal resistance where it would be much better to have it above this resistance level.
So, if the price rises and reaches 0.87007 resistance level there, we could see a bearish signal. Stop loss would be above 0.87467.
Profit targets are below current support level and the first profit target is inside the uptrend channel. If the price returns down below 0.85987 we could see profit target 1 reached easily.
Second profit target is much harder because there is another support level that will be hard to break down. And we have an uptrend channel that needs to break below in order to reach that profit target 2.
As everything looks, we should wait for the price to reach higher levels and from there look for bearish signals.
And if that happens profit targets would move higher to make them easily reachable.
Check other trading analysis inside – Bat Pattern Trading articles
Price Action Analysis
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