Stocks and indices are getting slammed, and Dollar is gaining before the FOMC. We saw that one before, but the drop’s magnitude on stocks is panic-like and may not be easily stopped. Today, we will leave stocks and focus on the Forex market. Today we will look at the GBPUSD pair, which is getting ready for a major bearish reversal.

GBPUSD Weekly 14:20 GMT

The whole of December and the first week of January were really great for the cable. The price moved with great respect for the principles of the technical analysis. Check it out yourself. First of all, the bearish correction managed to stop on the 38,2% Fibonacci, which is an extremely important support for me. In addition to this, the whole correction was shaped like a flag (green), which often increases the chances for the trend continuation.

The breakout of the 23,6% Fibo and the upper line of the flag happened at the beginning of the year and gave us a legitimate buy signal. The legitimate signal happened to be a false one unfortunately. Buyers wasted a very handsome price action setup and the price reversed, creating a false breakout pattern (red). Price is now back below the Fibo and the upper line of the flag. With that, the signal can be only one: sell.

The sentiment is negative, as long as we stay inside of the flag. Price climbing back above can be considered a buy signal, but chances for that are now limited.

Share.

About Author

During his career, Tomasz has held over 400 webinars, live seminars, and lectures across the globe. He was also an academic lecturer at Poland's Kozminski University. In his previous work, Tomasz initiated live trading programs, where he traded on real accounts, showing his transactions, providing signals and special webinars for the accounts; none of which were ever negative. Tomasz gives preference to a technical approach to trading: mainly price action with very strict money management rules. He believes that the most important thing in trading is your mind, so it is much better to focus on trading psychology than to look for the Holy Grail of trading systems.

Comments are closed.