Potential Correction For Gbpusd

Sophia Todorova has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens.

 

Since making a new high at the test of weekly down trendline at 1.6343, Gbpusd has pulled back to its 4-hour trendline support at 1.6140s, which has so far been holding. However, the 4hr chart (shown below) has what appears to be a head and left shoulder formation, resulting from its reaction to the weekly resistance. There is a shelf of resistance at 1.6250/60 which has the potential to encourage the formation of a right shoulder for the bearish reversal. The labeled chart explains what I am thinking. If price were to test this level and is not able to breach the horizontal line drawn shown, I think it would be a good idea to look for a bearish candlestick formation to confirm entry for shorts. If this plays out, the potential target levels I’d consider are: 1.6200 (4hr up trendline), 1.6090 (past support point), and 1.6030, which is just ahead of major weekly support where a weekly right shoulder resistance got invalidated.

My previous article on this pair explains my general outlook, and should the scenario above not play out, I would concentrate on the levels mentioned in that in that post: http://winnersedgetrading.com/gbpusd-trendline-resistance-technical-analysis/

Thanks for reading. Trade safely!

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  • Hi jopito. No, I did not see the article from Mani. All targets for the shorts mentioned above have been met, but I am still generally bullish on the pair. We could see a bounce from this weekly support now. Thanks a lot for your comment! 🙂