Technical Update - GBPUSD reversal time or continued decline
Kim Cramer Larsson
Technical Analyst, Saxo Bank
GBPUSD has been trading in a falling channel over the past few months now seems to be forming a Falling Wedge like pattern – not confirmed yet, however. (A Wedge must touch the two falling trend lines a min. of five times. So far it has only touched four times)
However, RSI has been rising showing divergence indicating a weakening of the down trend and a possible rebound. GBPUSD has formed a Doji Morning like formation indicating a bottom and reversal. It is not confirmed, however. A break of the short-term falling trend line needs to be broken. If GBPUSD breaks below 1.1875 the bottom and reversal pattern is busted and GBPUSD is likely to test lower falling trend line.
If that scenario unfolds AND if RSI breaks below its rising trend line GBPUSD is likely to test its lower falling trendline and could quite possibly break below it.
If that scenario unfolds there is no strong support before around 1.14. However, looking at the weekly chart there is divergence on RSI indicating that the bear move since May could be the final exhaustive move.
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