GBPUSD Chart 11

GBPUSD - In Possible Expanding
Triangle - In Bearish Swing

GBPUSD – In Possible Expanding Triangle – In Bearish Swing by DanV on TradingView.com

3 March 2019

Updates and comments

Background:

Since early January 2019 the prospect of soft Brexit outcome has benefited sentiments towards GBP which has rallied from 1.2440 area to recent peak in 1.3350 area.

The meaningful vote is scheduled for 12th March which if it fails then further votes on No deal exit is on 13th March and negative outcome will be followed by vote for extension of exit date from 29th March to some future date.

Lack of coherent views on Brexit Deal across the House of Common and infighting on other aspects in Opposition Party is now likely to be the main focus along with EU’s stand on not re-negotiating Back-Stop all of which could add to negative sentiment for GBP for next several weeks. 

Summary of some of the technical: 

1. From the peak in April 2018 to Aug 2018 low GBPUSD declined in an abc zigzag around 1.2680 area. 
2. From Aug 2019 low the price has formed 3 major swings all of 3 minor waves so far. Each extremity of these swings form slightly higher high and lower low than the previous one. 
3. Such pattern formation could form in abcde expanding triangle (of 3-3-3-3-3 structure). If this is the case then the price appear to have just completed wave C and decline in wave D is anticipated towards 1.25 -1.23 
4. We note momentum divergence with price from RSI and MACD on daily time frame. And MACD approaching zero line resistance on Weekly (see chart below in Update section). 
5. There are some interesting time symmetries marking out the major high and lows of the price development so far. So based on this along with seasonal the guesstimate for the wave D around 1.25 – 1.23 could complete towards back end of March to mid April and Wave E around Late June/July 2019. 
6. Overall this expanding triangle in this position would be bearish as a continuation of previous decline from April 2018 with GBPUSD eventually retesting the low of October 2016 or making a new lower low. 

Conclusion: A bearish trade could be planned using your favourite method of entry, exit and trade management for shorting GBPUSD. If the price declines in a 3 swing as described above then: 

1. Initial decline could be around 1.2750. 
2. 2nd Price target is around 1.25 – 1.23 area. 
3. Of course price will not move in straight line so clear stop loss should be used in conjunction with your entry method. 

Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, do your own analysis for your trade requirement and ignore my views. 

For those who appreciate my analysis, select to follow me and the chart for notification of future updates. Indicate you like my analysis by thumbs up, comments and sharing it with others. If you have an alternative idea then, please be constructive and share for all to learn from.

Thank you for taking the time to read my analysis. 

DanV 

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