Risk Management

Chart Art: Bearish Correction Plays On GBP/USD And GBP/JPY

Two business stock brokers stress and looking at monitors displaying financial information.

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

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

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!

Related posts
Risk Management

JPY Price Analysis: Portrays head-and-shoulders bearish pattern on softer Australia data

AUD/JPY drops 50 pips as Australia inflation, employment numbers disappoint Aussie buyers. Looming…
Read more
Risk Management

ECB’s Makhlouf: Could raise rates above 3.5% and hold them there – WSJ

European Central Bank (ECB) Governing Council member Gabriel Makhlouf stated on Tuesday that the ECB…
Read more
Risk Management

Gold Futures: Green light for further gains

Open activity in gold futures markets left in the back of 4 consecutive each day drops and rose by…
Read more
Become a Trendsetter
Sign up for Davenport’s Daily Digest and get the best of Davenport, tailored for you.

Leave a Reply

Your email address will not be published. Required fields are marked *