The GBP/AUD pair has been in an uptrend since the beginning of February 2023, but recently it has formed a rising wedge pattern on the 4-hour chart. This pattern is a bearish reversal pattern.
The rising wedge pattern consists of two upward-sloping and converging trend lines that connect the higher highs and higher lows of the price action. The pattern shows that the buyers are losing momentum and the sellers are ready to take control. The pattern is confirmed when the price breaks below the lower trend line, which acts as a support level.
One way to trade this pattern is to wait for a break below the lower trend line and then enter a short position with a stop loss above the last swing high. The target can be calculated by measuring the height of the wedge at its widest point and projecting it from the breakout point.
Another way to trade this pattern is to use an oscillator such as the Relative Strength Index (RSI) to identify bearish divergence. Bearish divergence occurs when the price makes a higher high but the RSI makes a lower high, indicating a loss of bullish momentum. This can provide an early signal of a potential reversal and a break below the lower trend line.
As shown on the chart below, the GBP/AUD pair has formed a rising wedge pattern with bearish divergence on the RSI. The price has recently broken below the lower trend line, signaling a possible bearish reversal.
GBP/AUD 4-hour chart with rising wedge pattern and RSI bearish divergence
The rising wedge pattern consists of two upward-sloping and converging trend lines that connect the higher highs and higher lows of the price action. The pattern shows that the buyers are losing momentum and the sellers are ready to take control. The pattern is confirmed when the price breaks below the lower trend line, which acts as a support level.
One way to trade this pattern is to wait for a break below the lower trend line and then enter a short position with a stop loss above the last swing high. The target can be calculated by measuring the height of the wedge at its widest point and projecting it from the breakout point.
Another way to trade this pattern is to use an oscillator such as the Relative Strength Index (RSI) to identify bearish divergence. Bearish divergence occurs when the price makes a higher high but the RSI makes a lower high, indicating a loss of bullish momentum. This can provide an early signal of a potential reversal and a break below the lower trend line.
As shown on the chart below, the GBP/AUD pair has formed a rising wedge pattern with bearish divergence on the RSI. The price has recently broken below the lower trend line, signaling a possible bearish reversal.
GBP/AUD 4-hour chart with rising wedge pattern and RSI bearish divergence