A double bottom chart formation can be seen on AUD/NZD’s daily time frame, indicating that a long-term uptrend might be in the cards. This could take place if the pair is able to make a strong break past the neckline of the formation around the 1.0900 major psychological resistance.
Stochastic is reflecting selling momentum for now though, which means that Aussie buyers are waiting for a good catalyst before going long. An upside break from the neckline could yield as much as 400 pips in gains since the chart pattern is roughly 400 pips high.
Going long at 1.0950 to catch the breakout and setting a 100-pip stop below the neckline could yield a 3.5:1 return on risk if one aims for the 1.1300 major psychological resistance.
By Kate Curtis from Trader’s Way