The risk sentiment in the market has shifted from last week to the benefit of the risk currencies such as the Australian Dollar. If this continues could we see a reversal pattern form on #GBPAUD?
Watch the video to learn more…
The risk sentiment in the market has recently shifted due to the headline news of the Omicron Covid-19 variant being more transmissible but less deadly. A recent study of those with the new variant has shown that symptoms have been mild. This news combined with strong seasonal around this time of year the risk sentiment could remain.
When the market is in risk on mode we see what is considered riskier assets appreciating. The Australian Dollar is one of those assets and we can see from the chart above that the price has broken through last week’s low already.
If this is going to continue we can expect to see a move back to the major swing lows and the 4hr time frame to form a downward trend. The reversal pattern could come on this time frame as we can see the market has formed a left shoulder and head of the head and shoulders pattern.
If the price rallies back to the left shoulder resistance level and the price forms bearish price action we can look to trade the right shoulder move lower. If the pattern then completes we could expect further downside in line with the market sentiment.
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