• Last Candlesticks pattern: Shooting star
• Time of formation: 31 Jul 2017
• Trend bias: Down
• Last Candlesticks pattern: Morning star
• Time of formation: 25 Aug 2017
• Trend bias: Near term up
GBP/USD – 1.3121
Despite falling to 1.3039 late last week, as the British pound recovered after holding above previous support at 1.3027, suggesting recent fall from 1.3658 top is not ready to resume yet and further consolidation above said support level is in store, hence another bounce to 1.3178 cannot be ruled out, however, as outlook remains consolidative, reckon upside would be limited to 1.3295-00 and price should falter below indicated previous resistance at 1.3338, bring another decline later. A break of 1.3027-39 support area would confirm the fall from 1.3658 has resumed for further weakness to 1.3000, then towards 1.2940-50 later but minor support at 1.2852 would contain downside.
On the upside, although initial recovery to 1.3175-80 cannot be ruled out, reckon upside would be limited to 1.3240-50 and resistance at 1.3299 should hold, bring another decline later. A break of indicated previous resistance at 1.3338 would shift risk to the upside and signal another leg of rebound from 1.3027 is underway for gain to 1.3400, then test of previous resistance at 1.3455 which is likely to hold on first testing.
Recommendation: Stand aside for this week.
On the weekly chart, sterling’s retreat after faltering below previous resistance at 1.3338 formed a black candlestick with a long upper shadow, hence consolidation with mild downside bias is seen for another test of support area at 1.3027-39, however, a drop below there is needed to retain bearishness and signal a temporary top has been formed at 1.3658 earlier, bring retracement of recent rise to 1.3000, then towards support at 1.2909 but anticipated near term oversold condition should prevent sharp fall below previous chart support at 1.2774 and price should stay well above another previous chart support at 1.2589, bring rebound later.
On the upside, whilst initial recovery to 1.3175-80 cannot be ruled out, reckon upside would be limited to 1.3295-00 and price should falter below resistance at 1.3338, bring another decline later. A break above 1.3338 would suggest the retreat from 1.3658 has ended instead, bring a stronger rebound to 1.3400-05 and possibly towards 1.3490-00 but price should falter well below said resistance at 1.3658. In the event sterling breaks above 1.3571 resistance, this would bring a retest of this last month’s high at 1.3658, break there would extend recent erratic rise from 1.1986 low to 1.3750-60 and 1.3800 but overbought condition should prevent sharp move beyond 1.3860 (61.8% Fibonacci retracement of 1.5018-1.1986).