Having bounced twice from the horizontal resistance level near 0.7436, the New Zealand dollar has seemingly stopped its advance against the US counterpart. The uptrend, which lasted from mid-November last year through late January this year, is now crowned with a double top pattern. A downside breakout through the pattern’s middle point would trigger a sell opportunity.
The yellow lines mark the tops and the “neckline” of the pattern. The cyan line is my potential entry level. It is placed at 10% of the pattern’s height below the “neckline.” The take-profit level is marked with the green line, which is positioned at 100% of the height below the lower yellow line. I will set my stop-loss to the high of the breakout candle or to the high of the preceding one if the breakout candle appears to be mostly outside the formation. I will ignore bullish breakouts from this double top. You can click on the image below to see a full-size screenshot:
I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this NZD/USD pattern. You can trade it using my free Chart Pattern Helper EA.
If you have any questions or comments regarding this double top on the NZD/USD chart, please feel free to submit them via the form below.
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