Is the pound’s rally over? A head and shoulders pattern has just formed on Cable’s 4-hour time frame and it seems that a break below the neckline has already taken place. Note that the pattern is roughly 250 pips in height, which suggests that the resulting selloff could be of the same size. Watch out for a potential bounce though, as stochastic is already in the oversold zone!
If you’re a fan of Fibonacci, then this setup might be for you! Guppy seems to be in the middle of a break-and-retest situation, as the pair is pulling back to the former resistance level around 154.00. Not only is this a major psychological level, but it also lines up with the 50% Fib. To top it off, there’s a tiny bullish divergence right there!
Now here’s another take on that GBP/AUD setup I showed y’all yesterday. It appears that price is finding support at the 1.6900 major psychological level at the moment, as this area lines up with the bottom of the range on the 4-hour time frame. With a bullish divergence hinting at a bounce, the pair could climb back up to the middle of the range or to the top, which is right around the 1.7400 mark.
To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis.
Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.