GBP/USD – Possible upward correction next week

GBP/USD – Weekly

Our expectations – As for the recovery after Brexit and Flash Crash, the currency pair reached the last defense line. There is something that we should to pay attention. Price behavior over the last two weeks clearly shows that bulls take precedence. Price Action – Double bullish Pin Bar in the Support Zone. The price is in a support zone formed by a bottom diagonal of the ascending channel, horizontal support and strong Fibonacci levels, which combines a 50% on upward correction with 23.6% of the long-term trend that start in 2014. 50 and 200SMA remain in bear formation. DeMarker also supports DeMarker, who is turning over the over-sales zone and pointing upwards – positive for the price, the likelihood of a new upward momentum.

Taking into account Double Top – I expect the pounding recovery does not last long. Most likely, the area between 1.3700 and 1.3750 (the blue field on the chart) will resist, and if not successfully overcome, the formation of H&S is very likely. Entry from the current levels will be risky, as SL has to be too remote and the first level of resistance remains close. In other words, the risk-benefit ratio will be very low. However, it is good to consider the support area and to hedge at least part of our short positions on the main trend – the downward trend.

 Trader Petar Milanov

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