GBP/USD – Head and Shoulders, Double Bottom, Rising Channel

by Admin

Awards 2013

GBP/USD 1H chart 4/18/2013 8:20AM EDT


Head and shoulders: 4/17 price action completed a head and shoulders seen in the 1H and 4H chart. However, another interpretation of the price action is a completed ABC correction. The 1H chart shows cable after the 3-wave correction completed the “H&S” pattern and consolidated in the neckline area.

Double bottom: As we get into the 4/18 US session, cable appears to have completed a double bottom, but the bullish break is not clear. A clear rally and hold above the 1.5270 pivot would be a sign of a move that has the 200-hour SMA in sight. This “bullish outlook” would be in the context of a reversion to the mean in the near-term. We can say that the market remains bearish in the 1H time-frame until price can cross back above the 200-hour SMA.

During the 4/18 session, a dip back below the central pivot area around 1.5245 should invalidate the double bottom and could revive the bearish outlook of the 1H time-frame.

Momentum: Also, if the 1H RSI reading can push back above 60, it will show loss of bearish momentum. A push above 70 shows the market is sideways with a slight bullish bias due to the prevailing trend from March seen in the 4H chart.

Rising channel: The 4H chart also shows a rising channel that held price structure bullish since the March and 2013 low at 1.4830. A break below the current “double bottom” should challenge this rising channel. A break below it (probably requiring a break below 1.5150), should open up a bearish outlook in the 4H chart, possibly back down to the 1.4830 low.

GBP/USD 4H chart 4/18/2013 8:27AM EDT