GBP/USD Mid-term Forecast

Author: Vin Coco, participant of the Analyst Contest

Although the cable has currently a bearish setup, from a longer-term view, there are some elements that suggest that there could be a possible bounce and a change in trend from bear to bull.

Elements to be considered for the Trading Forecast (based on Technical Analysis):

PROs:

On Image1

• Price is still in a Rising Channel (red dashed) ;
• Symmetrical Triangle formation highlighted in light purple (lower pecks and higher valley “compressed” into two converging trend lines) has broken upward, retraced back to the upper trend line and then continued to rise;
• the points A and C of the Triangle are also the Neck of a Complex Inverted Head and Shoulder (1 Left Shoulder and a couple of Right Shoulders);
• the projection of the target between the 2 Chart Pattern almost coincide – 1.5170 area (long big purple arrows);
• SMA20, SMA50 and EMA are all still in Bull configuration;
• lower Bollinger Band is converging towards the price.

CONs:

• On W chart – Image 2 – the turncoat Resistance (former Support defined by the Piercing Pattern and the Bullish Engulfing identified by the 2 green arrows) has performed well in the last sessions, being able to reject the bull power more than once. To be notice the inability to close above the aforementioned level and the formation of a Bear Sash with a long upper shadow above the black candle (red arrow on the right);
• on Daily basis – Image 1 – an Evening Star and a Bearish Engulfing have confirmed the Resistance level (blue line) make by the other Evening Start located at A – no chance to go further for the bull in this area, at least until now… ;
• SMA200 is above the price.

Image 3 shows the target prediction for the future sessions (thin purple arrows):

Any comments and suggestions below are very welcome.

Source:: GBP/USD Mid-term Forecast