Hi Traders! GBPUSD forecast follow up and update is here. On March 3rd I shared this “GBPUSD Forecast And Technical Analysis” post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we could see that the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently, it looks like a correction is happening. In addition to this based on the Stochastic Oscillator, we could see that the price has reached its extreme here as well, we may consider this as yet another evidence of bearish pressure. So everything looks good here for the bears and until this strong resistance zone (marked in blue) shown in the image below holds my view remains bearish here and I expect the price to continue lower further.
GBPUSD H4(4 Hours) Chart Current Scenario
On the H4 chart, my view was bearish and I was expecting the price to move lower further until the strong resistance zone holds. After the bearish trend pattern, we had a pullback and the price was holding below the strong resistance zone. The price then moved lower further as I expected it to and delivered around 240 pips move until it was blocked by a bullish divergence.
The market provided us with various facts supporting the bearish view on the H1 chart. The H4 chart pullback happened in the form of an ABCD pattern on the H1 chart. The price which was moving higher created a false break with a bearish divergence between the first high that has formed at 1.40056 and the second high that has formed at 1.40166 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view, also there were no signs opposing this bearish view. Then as you can see in the screenshot below how the price moved lower as per the plan.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bearish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions.
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Happy Trading!
Yordan Kuzmanov
Chief Trader at the Traders Academy Club
