Tuesday, 27 August 2013

GBP/USD showing bearish patterns on weekly, daily, and hourly charts

Yesterday I tweeted "EUR/USD looks to be setting up for a decline... I'd rather be short GBP/USD".

Here's why.

Weekly chart shows a break lower from a huge triangle, targeting a move to 1.30ish ie. much lower.

Daily chart shows a break lower from a bearish wedge, and crucially the subsequent decline has been swift enough to confirm the wedge interpretation... often they morph in to something else. If the market is to continue to confirm the wedge, we should see a swift decline toward the base of the wedge, at the least.

Hourly chart zooms in on this month's action, showing the late stages of the wedge and also that the market is now moving lower in a trend channel. I haven't shown it on these charts, but interestingly this trend channel is parallel to the one that captured most of the strong decline from mid-June to early-July.