GBPUSD, consolidation, before more down moves?

FX:GBPUSD   British Pound/U.S. Dollar
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The GBPUSD             pair is currently trading inside a rising channel , after a large drop from the high of 1.5818 on the 25th of August 2015. Price traded briefly above the upper line of the channel andl almost reaching the 76.4% retracement level from the mentioned high. Regarding the long-term Guppy GMMA, on the weekly chart, it started to expand again, after a small period of compression. On the daily chart , the long-term GMMA is highly compressed, indicating agreement in price. All of this indicate a neutral to short bias on the long run.

On the 4H timeframe, the long-term GMMA, is not expanded enough to indicate a strong uptrend, further indicating that there is a high probability that price is in fact consolidating inside the channel before further down pressure.

Because markets do not behave as we expect or as we want them to behave, it is important to have different trading scenarios in place...

Scenario 1: (Blue arrows)

Price will continue to fall inside the channel to the 1.5250 - 1.5484 area, which coincides with the lower line of the upwards channel, finds support, bounces back up, completing a 5th leg of an Elliot wave pattern, moving down, breaking the channel to the downside ( this will likely to be confirmed by divergence on the RSI at the completion of the 5th leg of the wave) . Price could then find resistance on the 1.5250 - 1.5484 area again , or going further and move the width of the current upwards channel (orange arrow).

Scenario 2: (Black arrow)

Price will continue to fall inside the channel to the 1.5250 - 1.5484 area, which coincides with the lower line of the upwards channel. Price then fails to find support and breaks through both support and lower live of the channel. If this occurs, it is expected the price to travel at least the width of the current channel.

All the trades ate managed with a count back line stoploss, after being triggered.

Despite al the above, neutral to bearish bias on the long run can be expected, but on the short run, there is still room for some moves to the upside.

Happy trading and god luck!
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