• Joseph Barreca

Has GBP/USD Bullish run come to an end?

Something I always like to see on a Monday is the potential reversal of an old trend and start of a new trend. Which is what I'm seeing in GBP/USD

Now, anyone that knows me knows that I don't trade reversals, but I am always aware when a trend may come to and end before a new one starts. If you take a look at the Daily chart on GBP/USD you'll see a very familiar potential reversal pattern (head & shoulders) which gives us an indication that this, may very well be the end of this up trend.

Looking at it more in-depth though we can see price has been in consolidation at the high of 1.4200 and has failed to push past the range for 6 months now. Take a few factors into consideration here, Technicals we have a strong reversal pattern at a major resistance, seasonally we have strong data suggesting that on average, over the past 60 years, in August and onwards the GBP/USD has been in a bearish market.

Take a close look at a couple factors here.

Long-term Forecast - Price is set to be negative for the next 25-40 days (2 days at -0.24%, 5 days -0.41% 7 days -0.46% 10 days -0.47% 15 days -0.74% 20 days -0.83% 25 days -0.89%

Long-term Prediction - Price has fallen below the 'average' 100 level and is sitting at 99.58 which shows bearish momentum is set to come in

DMX (Dumb money index) - We can see Asset Manager / Institutions are shorting the GBP at 58.3k compared to buying 36.3k while simultaneously buying USD at 12k as opposed to shorting 1.8k Lots.

INDEX - USDX is showing signs of inverse H&S and bullish momentum while GBPX is showing bearish momentum and a H&S pattern starting to form.

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