Is GBP/USD in for further declines? Well, looking at its 1-hour chart, it looks like the pair has been consolidating into a very obvious rising wedge, which is generally classified as a bearish forex chart pattern. However, our moving averages have just recently crossed-over into an uptrend. But if we zoom out to the higher time frames, we can see that the overall trend for the pair is still down. Stochastic is also pointing up, which could be a sign that forex traders who are bullish on the pair may be gearing up for a potential upside breakout. Anyhow, if the bottom of the wedge is broken with convincing and sufficient bearish momentum, then the pair may likely move lower for around 300 pips since that is roughly the height of the forex chart pattern.
GBP/JPY’s price action is very similar to that of GBP/USD’s in that a rising wedge pattern has formed after a large bearish move. Like the GBP/USD rising wedge setup above, the moving averages have also crossed-over into uptrend mode, but unlike the GBP/USD setup, stochastic has just reached overbought territory, so forex traders who are bearish on the pair may be be enticed to start jumping in soon. As for the potential down move from a possible breakout, it may last for about 500 pips, based on the height of the formation.
The final chart for my awesome pound + rising wedge + safe-haven triple combo is that there rising wedge on GBP/CHF’s 1-hour chart. And as y’all can see, the prior down move before the chart pattern formed is not as neat, but GBP/CHF does more or less have a similar price action to the above two setups. Anyhow, the magnitude of the chart pattern is around 260, so a downside breakout may likely have enough momentum to last for the same amount. As usual, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
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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