H4 bearish flag pattern in motion
GBP/USD:
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Down nearly 11% in the month of March, south of trendline resistance (1.7191), traders recently witnessed a familiar area of support at 1.1904/1.2235 give way. With price trading at multi-year lows, the next observable support target on the monthly timeframe falls in around 1.1297, a 127.2% Fib ext. level.
Daily timeframe:
Downside risks continue to build in GBP/USD after overthrowing trendline support (1.2373), pulling the RSI indicator deep into oversold terrain, trading at levels not seen since early 2016. The 200-day SMA has also begun turning lower after flattening since November 2019.
The decisive push beneath the said trendline support places the weekly 127.2% Fib ext. firmly on the radar at 1.1297.
H4 timeframe:
Partially altered from previous analysis -
Wednesday’s precipitous decline formed another layer of supply at 1.2192/1.2049, positioned south of a demand-turned supply at 1.2162/1.2220. Fading multi-year lows, we recently saw a mild consolidation phase between 1.1449/1.1661, which has developed into a bearish flag pattern (green). This is generally considered a continuation formation, and likely saw traders enter short positions based on the recently closed bearish H4 candle. The downside target for this pattern, measured by taking the length of the preceding move and adding it to the breakout point, falls in around 1.0905 (blue arrows).
H1 timeframe:
Impetus derived from an emergency Bank of England (BoE) interest rate cut and stimulus package generated a reasonably spirited recovery Thursday. Despite an earnest attempt to maintain gains, downside heading into the London close formed out of supply coming in at 1.1861/1.1762, which saw prices settle at 1.1484.
In recent hours, though, we’ve seen a dip to lows at 1.1410, levels not seen since the 1980s!
Despite downside, the RSI is seen recovering ahead of oversold terrain, currently trading at 40.00, offering clear bullish divergence.
Structures of Interest:
According to chart studies, this remains a sellers’ market until 1.13ish, the weekly Fib ext. level at 1.1297.
Based on sellers out of the H4 bearish flag pattern, and weekly price displaying room to the downside, a retest setup at the underside of 1.15 may be on the cards today. This could be an opportunity for fresh sellers to take advantage of possible downside.
Monthly timeframe:
(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Down nearly 11% in the month of March, south of trendline resistance (1.7191), traders recently witnessed a familiar area of support at 1.1904/1.2235 give way. With price trading at multi-year lows, the next observable support target on the monthly timeframe falls in around 1.1297, a 127.2% Fib ext. level.
Daily timeframe:
Downside risks continue to build in GBP/USD after overthrowing trendline support (1.2373), pulling the RSI indicator deep into oversold terrain, trading at levels not seen since early 2016. The 200-day SMA has also begun turning lower after flattening since November 2019.
The decisive push beneath the said trendline support places the weekly 127.2% Fib ext. firmly on the radar at 1.1297.
H4 timeframe:
Partially altered from previous analysis -
Wednesday’s precipitous decline formed another layer of supply at 1.2192/1.2049, positioned south of a demand-turned supply at 1.2162/1.2220. Fading multi-year lows, we recently saw a mild consolidation phase between 1.1449/1.1661, which has developed into a bearish flag pattern (green). This is generally considered a continuation formation, and likely saw traders enter short positions based on the recently closed bearish H4 candle. The downside target for this pattern, measured by taking the length of the preceding move and adding it to the breakout point, falls in around 1.0905 (blue arrows).
H1 timeframe:
Impetus derived from an emergency Bank of England (BoE) interest rate cut and stimulus package generated a reasonably spirited recovery Thursday. Despite an earnest attempt to maintain gains, downside heading into the London close formed out of supply coming in at 1.1861/1.1762, which saw prices settle at 1.1484.
In recent hours, though, we’ve seen a dip to lows at 1.1410, levels not seen since the 1980s!
Despite downside, the RSI is seen recovering ahead of oversold terrain, currently trading at 40.00, offering clear bullish divergence.
Structures of Interest:
According to chart studies, this remains a sellers’ market until 1.13ish, the weekly Fib ext. level at 1.1297.
Based on sellers out of the H4 bearish flag pattern, and weekly price displaying room to the downside, a retest setup at the underside of 1.15 may be on the cards today. This could be an opportunity for fresh sellers to take advantage of possible downside.
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