October 1, 2015 in Chart Alert
GBP/USD’s fall from 1.7192 had completed 50% retracement and refused to go any further. The second wave of downward move seems to have 38.2% retracement level as resistance instead of support.
The upward move from 1.4567 had reflected the psychological support of 1.4500 range. However, the pair could not break the psychological barrier of 1.6000 ranges. The fall from there brought the aid of 1.5500 psychological support, which remained in place for 8 weeks but then the breakout was witnessed.
The bearish momentum targeted the previous support of the low of the week of may 31st i.e. 1.5170. Please check the nice little spinning tops candle of that week in the following chart. This support was very critical as it also brings in the psychological support of approaching 1.5000 ranges. However, the support did not sustain and that makes the bearish out look quite strong.
Let’s did a bit deeper and check the price-action of last 15 years.
It is evident from the chart that since 2009 the price-action has been in a volatile sideways mode and the pair clearly failed to take out the year 2005’s strong support turned resistance.
There was a fake-out of this sideways movement during 2013 which had resulted in a strong upward jump but the price again failed to take out the above mentioned support turned resistance and the subsequent fall again broke the rectangle chart pattern. The above chart speaks for itself and indicates why the focus remains on downside now.
Let’s have another look on the same chart but from a different angle:
The triangle pattern on the above monthly chart had a breakout which did not sustain. The decline has cause a downward breakout of the support and that support seems to be acting as resistance now.
Let’s get back to the weekly chart once again:
The above chart shows an approximate Gartley pattern on the weekly chart. It’s not an ideal one as the retracement levels are not ideal to the Gartley pattern but then who says that the world is ideal. Will this Gartley cause the trend resumption to target 1.4500 ranges once again? Well, possibilities do exist but first we expect the pair to target 1.5055. If 1.5000 support fails then decline should extend first towards 1.4800 and then possible 1.4580.
On the upside we expect resistance near 1.5355 and any break above that will start neutralizing the above outlook. Please note that this resistance is derived from the daily chart.