A very promising bullish forecast for GBP/USD thanks to a bullish Wolfe Wave pattern. I personally prefer Wolfe Wave patterns slightly over harmonic patterns, not saying that one is better or more reliable than the other, but on large time frames Wolfe Wave's can be very profitable as they set up well for long term swing trades.
But enough about my preferences. At the moment we are witnessing a confirmation of a trend reversal in GBP/USD, please see my post from 23.06.2018 for a detailed description of the trend reversal in progress.
The bullish hammer created last week seemed dismal, but upon closer inspection what is happening below not only explains and highlights a bullish trend reversal, it also supports the notion that price is gathering momentum to the upside. One could even argue that an Elliott Wave 3 is forming, which wouldn't be too far fetched since point 6 of the bullish Wolfe Wave is almost exactly at the 1.618 Fibonacci extension, measured from 1.986 to 1.4377.
But coming back to what is happening below price at the moment reveals powerful evidence for upside momentum. 1) Looking at price in the highlighted box, you can see the bearish divergence between price and the 100SMA, (highlighted in red) which among other technical indicators, was an early indicator of a drop in price after the double top. 2) 'Staying in the box', currently we can see bullish divergence between price and the 100SMA, which is now forming dynamic support around the yearly pivot point level. 3) RSI convergence: If you look at the RSI after it broke out from below the 33.33 oversold area, it never once even touched the 33.33 level again, hence, revealing further evidence of bullish momentum building up.
Using point 2 of the bullish Wolfe Wave as a target, and drawing a diagonal line from 1.1986 to where the extended diagonal line formed from points 1 & 4, you can see that that target could be hit by Octobre this year. Some use Wolfe Wave's also to forecast times of entries and exits, I personally don't, however, it is interesting to note or mention it - especially if price does reach 1.5930 by Octobre, in which case I will be boasting and bragging lol!
Trade long (RvR ratio 2.41) Entry 1: Close above 1.3835 (Conservative entry) Entry 2: At market - though best to wait. S/L: 1.2966 T/P 1: 1.4566 T/P 2: 1.5019 T/P 3: 1.5930 As always, scale out your profits and adjust your stop/ loss to suit your personal risk management profile.
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