GBP/USD Forms Bullish Correction Pattern
James Chen March 21, 2013 6:20 PM
<p>GBP/USD (daily chart) as of March 21, 2013 has settled into a potential bullish correction/reversal pattern in an inverted head and shoulders formation. While these […]</p>
GBP/USD (daily chart) as of March 21, 2013 has settled into a potential bullish correction/reversal pattern in an inverted head and shoulders formation. While these types of patterns are often expected to reverse trends, they can also serve as indicators of potential corrections in a trend without the complete reversal. The current head and shoulders pattern may be just such an indication. The left shoulder in the beginning of March is at 1.4985, the head in mid-March is at 1.4830 (with a hammer candle reversal pattern), and the right shoulder just yesterday is at 1.5025. Within this pattern, the neckline breakout trigger is around the 1.5200 level.
With a neckline breakout, major resistance resides nearby in the 1.5250 area. Further to the upside is the key 1.5400 resistance objective, also around the 38.2% retracement of the downtrend from the 1.6376 high in January to the 1.4830 low in March. If the expected head and shoulders price target is to be reached, the low of the pattern at the head measured to the high of the pattern at the neckline can be projected to the upside towards the 1.5600 area, with is also the key 50% trend retracement.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.