Harami Leads GBPUSD Reversal

August 14, 2013 in Forex Analysis

In the following daily GBP/USD chart, we see the Ichimoku indicator accompanied by Candlestick Patterns. Prices have been on a strong uptrend, beginning from below the Ichimoku cloud since early July 2013’s low of 1.4818.

gbpusd g12 14.8.13

GBPUSD Daily Chart from Bloomberg

We draw your attention to the Candlestick pattern shaded in Green:

Harami (HR): Second real body is relatively small and contained within the prior session’s real body.

Note how the bullish Harami signalled a bullish reversal, which was confirmed by a Tenken Sen (green line)/ Kijun Sen (red line) bullish crossover in the middle of July, and finally a bullish Kumo resistance breakout in early August. This is an example of how the Ichimoku indicator reinforces candlesticks price action.

The bulls seem to have exhausted with consecutive bearish candles in the past 3 days. This is not surprising as the flat Kumo support indicates a sideways market consolidation, and prices tend to be pulled back to a flat Kumo equilibrium.

While Tenkan Sen is still above Kijun Sen, the bulls will look for an upward sloping future Kumo. If not, prices will most likely head down towards the Kumo.

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