AUD NZD- BULLISH BREAKOUT SIGNAL ABOVE MAJOR CONSOLIDATION
This pair has given us a Bullish breakout candle to signal the possible start of a sharp breakout in favour of the Aussie Dollar. A Range setup that lies above the Resistance of the larger Pennant was broken today with a strong Bull Candle. Breakouts from large Consolidations often have smaller setups at their boundaries which provide the signal needed to start the breakout. If this breakout materializes, then we could see the first major target at 1,1298 being hit by the end of this month.
The chart below shows that this pair began forming the large Pennant after breaking above the major Inner Trend Line of a previous Downtrend.
Large sideways patterns and breaks of Inner Trend Lines often appear at the end of a very long trend and the start of new one. The chart below shows us a closer view of this Pennant that could represent the setup that starts this new trend and takes us up to the Outer Downtrend Line.
You can see the Range setup above the Resistance of the Pennant. Smaller Consolidation patterns are often formed ahead of a breakout from an even larger Consolidation. Assuming that the signal given above this Range will lead to a new Uptrend, the first target to be hit would be the Breakout Equivalent (B.E.) of the Range. This is the target to which all Consolidation patterns break towards before coming to an end.
When this first target is hit, the market is likely to pause for a short period before moving on to hit higher targets. Traders have the option of either exiting for a profit at this area and re-entering when the trend resumes or holding on for even larger gains. This decision will often come down to the trading objectives of the individual Retail/Institutional Trader.
As straightforward as this setup appears to be, trading Consolidation Breakouts can be very difficult. The Pip targets are much larger and can present a challenge as to how many we should aim for and the time period over which we should hold our positions. We are also confronted with the dilemma of whether to monitor the positions or leave them until the target is hit. All of these issues and more are broken down and solved in the Trading Manual below. Targets, Stop Losses, Limits as well as the Holding Period for these types of trades are all based on clear and proven trading rules that you can use for this and upcoming trading opportunities.
RECENT EMAIL FROM CLIENT