Beautiful head and shoulders pattern emerging.

FX_IDC:GBPUSD   British Pound / U.S. Dollar
Tell you the truth I got excited today when I saw the strong pound dollar sell which I think shows that we are starting to make a move to the downside, However this could also just be a false move to make money flow into the market and then carry on along the current trend upwards; despite the news of our current recession, the market does seem to be holding at the moment.

Now despite what I have just said the pound is starting to show signs of exhaustion and has been moving sidewards for almost three weeks. I believe the market is about to drop and this is why.

First of all we have just had news that we are officially in a recession so the pound has no business going up, it needs to be showing some kind of relationship to reality here in the uk.

Then there is what looks like a beautiful head and shoulders forming which If I am right about the exhaustion in the pound will also coincides with a break and retest of the current trend.

Last but not least we have confirmation with the divergence.

So in the first instance price needs to go up because even if price is going to go down the current trend line needs to be broken.

Still too early to call this trade but if we do not peak the current high of 1.3267, (just under the pink line drawn) continue to show signs of weakness make lower lows and lower high’s I’m going in.

If the signs I’m reading change I’ll be back.

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