Sup, dawg! Let’s start this week’s intraday charts update with a stroll down memory lane as we check up on our old setups on GBP/CHF and GBP/USD.
If y’all can still recall, we identified that there head-and-shoulders pattern last Friday. Now, I told y’all back then that head-and-shoulders is a bearish chart pattern, so we were waiting to go short on the pair once the pattern is confirmed by a downside break past 1.2960.
Well, check that out, dawg! That’s right! The pattern did get validated and the pair has moved lower for over a hundred pips since then.
However, if y’all can also recall, I told y’all back then that if the pattern gets validated, then them bears will likely be gunning for 1.2750. But I also warned y’all that there’s an area of interest along the way at 1.2850.
Well, it just so happens that that’s where the pair is currently at. And since the pair is already hesitating, there’s a chance that the pair may move higher, so y’all may wanna lower your stops. And all the more so, given that stochastic is already signaling oversold conditions and all that.
However, that also means that we may get a chance to either add to our shorts or, if you missed the initial breakout move, jump in with a fresh short.
Anyhow, if we use our Fibonacci tool, we can see that the broken support at 1.2960 happens to sit right smack on the 50% retracement level. As such, that’s the most likely pullback area. Although y’all may wanna keep an eye on the other retracement levels since they’re also valid pullback areas.
We first identified and played with that descending channel way back on September 28. Back then, we were waiting for a bounce from the channel’s resistance area somewhere below the area of interest at 1.3480.
As it turns out, the minor psychological level at 1.3450 ended up being the channel’s resistance area. And since then, the pair has moved lower for almost 200 pips. So congratulations if you were able to bag some pips from this setup. Aww, yea!
Anyhow, the pair has just hit the channel’s support area. Also, stochastic is signaling oversold conditions and all that. As such, we’re waiting for the pair to move higher to the channel’s resistance again, which should be at or just above 1.3320. And if or when the pair does finally pull back to 1.3320, then them bears will likely be gunning for 1.3210 next.
However, there’s always a chance for an upside breakout. Such a scenario is highly unlikely at the momentum, though. All the same, just be ready to bail should the pair stage an upside breakout and move higher past 1.3400 and 1.3480.
And as usual, just make sure to practice proper risk management, a’ight?