Yellow zones- critical zones based on the monthly time frame
Red zones- critical zones based on the daily time frame
Blue doted line- upper/bottom trendline of the monthly closed triangle
From last week’s COT Report we can see an increase in the GBP short contracts, but due to the weakness of the USD for the last month, we can take another point of view for this pair.
Since March the GBPUSD pair has been in a closed triangle structure and it respected its upper/bottom trendlines multiple times. But don’t get confused by this, because in the bigger picture the situation tells us something different.
On the monthly time frame, we are also in a closed triangle structure, but since 2008. And now we are getting pretty close to the upper-trendline of this formation. Where strong bearish pressure will kick in. Right now, we’re entering the monthly critical zone, so high volatility can be expected.
What will happen?
Price will move towards the 1.29000 area where it meets the upper-trendline of the monthly closed triangle. A small correction before that is possible, since we are in the monthly critical zone. If we see strong rejection after reaching 1.29000- sell pressure may lead towards the 1.25000 area. But if the price makes a strong close above the upper-monthly-trendline then an opportunity for the 1.38000 mark will open. And so, it can move towards its equilibrium area.
There are still 250+ pips till the trendline is reached.
Happy trading!
Red zones- critical zones based on the daily time frame
Blue doted line- upper/bottom trendline of the monthly closed triangle
From last week’s COT Report we can see an increase in the GBP short contracts, but due to the weakness of the USD for the last month, we can take another point of view for this pair.
Since March the GBPUSD pair has been in a closed triangle structure and it respected its upper/bottom trendlines multiple times. But don’t get confused by this, because in the bigger picture the situation tells us something different.
On the monthly time frame, we are also in a closed triangle structure, but since 2008. And now we are getting pretty close to the upper-trendline of this formation. Where strong bearish pressure will kick in. Right now, we’re entering the monthly critical zone, so high volatility can be expected.
What will happen?
Price will move towards the 1.29000 area where it meets the upper-trendline of the monthly closed triangle. A small correction before that is possible, since we are in the monthly critical zone. If we see strong rejection after reaching 1.29000- sell pressure may lead towards the 1.25000 area. But if the price makes a strong close above the upper-monthly-trendline then an opportunity for the 1.38000 mark will open. And so, it can move towards its equilibrium area.
There are still 250+ pips till the trendline is reached.
Happy trading!