Forex Trading Library

GBPUSD – A deeper correction expected but buyers to return

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Monthly: Moved higher from the 2016 low of 1.1905. Levels close to be bespoke resistance at 1.4390 found sellers. Aprils price action formed bearish Outside Bar, often an indication that the rally (correction) has come to an end. Follow through selling pressure has resulted in GBPUSD trading to the lowest level in 7 months. Reverse trend line support is located at 1.2755

Weekly: After completing a bullish Elliott Wave pattern (5-waves) a bearish Outside Week was posted from the high (1.4377). Six consecutive negative weekly performances have resulted in GBPUSD breaking the channel formation to the downside. Reverse trend line resistance is located at 1.3840. The weekly Ichimoku Cloud has stalled the selloff.

NOTE: the 61.8% pullback level (from the 1.1897-1.4364 move) is located at 1.2842. This is close to reverse trend line support (monthly) and is the prime medium-term target for the long-term outlook

Daily: Buyers returned inside the 261.8% extension level of 1.3176 (from 1.4377-1.3918). The medium-term view is now for a corrective (mixed and volatile) move back towards 1.3640-1.3755 zone. Yesterdays Doji style candle highlights indecision. This corrective formation is normally in a three-wave pattern

Intraday – A correction lower (in a corrective wave) and we have trendline support located at 1.3287. This is also a congestion zone. With a stop placed under the 261.8% extension (daily section) of 1.3176 and targets towards 1.3700, this view offers ample risk/reward.

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