Friday, August 18, 2017
GBP/USD Is At A Strong Diagonal Support. USD/JPY Broke Out Below The Local Low
The trend line that connected the last lows (from 14th March 2017 until now) of the corrective rally of GBP/USD is a rather strong diagonal support for the pair. It has been consolidating at it for four days now without being able to pick a direction.
A clear breakout and D1 and W1 bars that close below the trend line would mean a drop to the next support at 1.2600 or even to 1.2550.
In case the bears fail we could see a rally toward 1.2900 – 1.2950.
Meanwhile the potential head and shoulders pattern on the USD/JPY chart did not come to fruition.
The third test of the local low at 108.729 was successful and the pair reached 108.601 mere minutes ago.
There are only a few hours left until the end of the trading week and the strong bears don’t seem to leave any hope for a rally.
I think that if the weekly bar closes as it appears it will – as a bearish pin bar, next week we could see a breakout below 108.129. That will be a significant signal for a strong and long-term drop in the following weeks and even months.