Hi Traders! GBPUSD short term forecast follow up and update is here. On January 25th I shared this “GBPUSD Technical Analysis And Short Term Forecast” post in our 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 Home Trader Club. Spoiler alert – free memberships are available!
On the H1 chart, we have a bearish divergence that has formed here as well, between the first high formed at 1.24350 and the second high formed at 1.24473 based on the MACD indicator which we may consider as evidence of bearish pressure. The price then moved lower and broke below the last low at 1.23128 thus creating lower lows which we may consider as another evidence of bearish pressure. So everything looks good here for the bears and until the key resistance zone (marked in red) shown in the image below holds my short-term view remains bearish here and I expect the price to move lower further.
GBPUSD H1(1 Hour)Chart Current Scenario
Based on the above-mentioned analysis, on the H1 chart, my short-term view was bearish and I was expecting the price to move lower further until the key resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the lower lows, we had a pullback but most importantly the price was holding below the key resistance zone. The price then moved lower and broke below the most recent uptrend line which we may consider as facts supporting the bearish view. The price then moved lower further and has delivered 460+ pips move so far!
Currently, we have a bullish divergence in play on the H1 chart, this is something that we definitely need to pay attention to as it is an opposite evidence. So if you are still involved in the sells then this is a very important place to consider and manage your trade (cash out or partial cash out or trailing protections or partial hedge, etc.. depending on the strategy that you work with). When you find any opposite evidence you should always consider managing your position.
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Home Trader Club Team.