Confluence of Technicals With Clear Targets

FX:GBPUSD   British Pound/U.S. Dollar
687 7 11
- I've been stalking this trade for a while, and everything for a downside scenario has finally come together.
- We've formed a pretty clean head and shoulders pattern right at the top of a multiyear wedge .
- This pattern is strengthened by a break of the trend line from July, but will be confirmed by a break of the neck line at 1.59. This also happens to be the 0.236 Fibonacci retracement from the July rally.
- If this follows through, my targets are the 0.382 & 0.618 retracements depending on how fundamental factors play into continuation to the downside. Both of these levels fit quite well into previous important support and resistance .
- There is a decent chance of this correcting back up to 1.61-1.612 before continuing downward, but I'll look to sell any rallies.


I share the bearish bias. However, this is more of a potential double top formation, as in H&S patterns, the right shoulder cannot be that close to the head.
It has the same meaning, but one shoulder is usually higher than the other. The head here is still higher than both of the shoulders so it would still technically be a valid head and shoulder pattern.
I didn't highlight it here, but what I've labeled the left shoulder is more relevant than a double top because that's where the RSI started to diverge also.
I agree, it seems more like a double top. but more importantly the bearish sentiment seems pretty valid.
It's splitting hairs, but the bearish signal is what's important. Their aren't any symmetry requirements like on a harmonic pattern though. The only requirements are a central peak surrounded by two lower peaks with an obvious neckline. 1.59 is a very important level for indicating the strength of the trend.
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