AUD/NZD Topping Out in Double Top Formation

One month after another AUD/NZD @ H4 pattern had led my trade to a take-profit, albeit in a trend-continuation setup, the Aussie vs. Kiwi pair has now formed a reversal pattern that promises an attractive entry should the actual breakout occur. Being a four-hour timeframe pattern, this double top didn’t take too much time to develop — just a little over a week — yet it is almost a picture-perfect example of a classic double formation. It shows a definite preceding uptrend, almost equal tops, and the neckline resting just where the final bullish wave began in the original uptrend.

The chart below shows the neckline and the two tops marked with the yellow lines. You can see a pending entry marked with the cyan line (placed at 10% of the pattern’s height below the neckline). I will set my take-profit to the level marked with the green line. It is placed at 100% of the pattern’s height below the neckline. 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 is trading mostly below the neckline. As the double top is an intrinsically bearish pattern, bullish developments should be ignored (unless they lead to the formation of an ascending triangle). Clicking the chart will open its larger version:

I have built this chart using the ChannelPattern script. You can download my MetaTrader 4 chart template for this AUD/NZD pattern. You can trade it using my free Chart Pattern Helper EA.

Update 2020-08-27: The short trade entry triggered today at 00:29 GMT. The opening price was 1.09168 with stop-loss at 1.09497 and take-profit at 1.08144. A minor pull-back ensued almost immediately:

Update 2020-08-28: The pull-back resumed, pushing the price to my stop-loss level yesterday at 21:05 GMT:

If you have any questions or comments regarding this double top on the AUD/NZD chart, please feel free to submit them via the form below.

Posted on Forex blog.