GBP/USD Forms Double Top

On the 4 hour chart the Pound has formed a very bearish pattern against the US Dollar.

The pair has formed a double top pattern around the 1.6582 price level and appears to be heading lower. A double top formation is a strong indicator of a price ceiling and often precedes a strong decline.

After retreating to the 1.6255 price level, the pair made a strong attempt to break above its previous high, climbing well over 350 pips. However ultimately the pair was unable break above this level and formed the second portion of the double top pattern. With this pattern, forex traders should look for a large to moderate decline that will typically continue until a strong resistance level is met. Because of the pair’s high volatility and heavy price movement, traders should use extra caution when making this trade.

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