Any pound bears in the house?
I’m seeing a couple of retracement opportunities on GBP/USD and GBP/JPY.
Check ’em while they’re hot!
GBP/USD: 4-hour
GBP/USD 4-hour Forex Chart
Cable formed lower highs and slightly lower lows, creating a falling wedge pattern visible on its 4-hour time frame.
The pair is currently bouncing off support and setting its sights on the top. Will it hold as resistance once more?
The handy-dandy Fib tool shows the levels where more sellers might be waiting to hop in. I’ve got my eye on the 61.8% level that’s right smack in line with the wedge top around 1.2175!
Technical indicators are pointing to a continuation of the slide. The 100 SMA is below the 200 SMA to suggest that resistance levels are more likely to hold than to break.
In addition, the 100 SMA coincides with the wedge resistance to add to its strength as a ceiling.
Stochastic has some room to climb before reaching the overbought zone, so the correction could keep going until it does. If any of the Fibs hold as resistance, GBP/USD could slump back to the lows at 1.1883 or lower.
GBP/JPY: 1-hour
GBP/JPY 1-hour Forex Chart
Here’s another neat retracement play on a pound pair!
Guppy has been cruising beneath a descending trend line on its hourly chart and looks ready to test resistance. Price is already testing the ceiling at the 61.8% Fib but might still go for a slightly higher pullback to the 164.00 handle.
The 100 SMA is below the 200 SMA to confirm that the selloff is more likely to resume than to reverse.
To make things sweeter for GBP bears, the 200 SMA lines up with the trend line to add to its strength as resistance!
Stochastic is also reflecting exhaustion among buyers, so turning lower would be the go signal for sellers to take over. In that case, GBP/JPY could drop back down to the lows near the 160.50 minor psychological mark.
Better watch out for bearish candlesticks right at the upside barriers!
