GBP/USD Invalidating Pattern Breakout
- 4H: In the previous post for GBP/USD (12.16.2009), I mentioned a possible breakout of a triangle pattern. However, I also noted that the break of the short-term channel resistance is needed for a confirmation. Also immediately after yesterday’s Daily Video Technical Update, the market invalidated this breakout. Some immediate signals were the reversal candlestick combination with stochastic crossover.
- The invalidation came when the subsequent bearish candles broke below 1.6200.
- Although the market did not behave the way we anticipated, it is still in the overall bearish mode, which was picked up when the market broke below and held below 1.6500.
- The market is now testing 1.6100, coincident with a downsloping support. The stochastic is oversold.
- The conservative trader will consider only bearish setups in the short-/intermediate-term, and attempt to “fade” bullish outlooks. At the moment, the market is at a level with some bullish interest. If there is, we should stalk the rally for topping action possibly around the 1.6200 area.
Fan Yang
Currency Analyst
Commodity Trading Advisor
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