Pound/US Dollar

[DaveT]

Pound/us Dollar

Apologies if this has been discussed elsewhere.

There appears to be a CLASSIC HEAD AND SHOULDERS TOP FORMATION on the spot GBP/USD.

Completion and breakdown would set the market up for a fall to the 1.67-1.69 area - the 61.8% FIBB retracement of the SEPT-FEB rally.

Any thoughts?

 

[DaxTrader]

Yes I'd noticed it too - very clear pattern.

Must admit, I find head and shoulders patterns mean very little if they aren't taken in the context of the bigger picture.

For example lots of flag type patterns set up as H&S initially and then in an uptrend the top of the right shoulder is broken and it shoots on up again. Maybe too many people go short then, forcing a squeeze.

They seem to work well as reverse H&S as a continuation pattern, but in isolation they are of less use.

Someone in Market Wizards (think it was the most recent one) talked a lot about it - he saw conventional patterns in isolation a non winning proposition, but he concerntrated on finding out when they worked, sounds obvious but crucial point.

 

[numspar]

DaxTrader I agree
I used H&S patterns on their own with varied success. However, when I used a MACD divergence signal along with a H&S pattern I was able to find more succesfull reversals. I look for a MACD divergence signal corresponding to the left shoulder and the head of the formation,then I take my entry on the right shoulder breaking out of the peak of the head formation.

 

[User]

I agree with the head and shoulder formation and yes it implicates a downward move. On a monetary policy fundemental note I'm thinking about a Long position.

However it did show alot of weakness earliar. Lets see.

 

[BBB]

If the H&S is bearish, what about the fib retracement levels? Surely all the fib traders will provide support?

May be, may be not.

Thats why our opinion or any of the fundamental TA principals) really isn't worth much.

TWUC!

 

[TWI]

Apologies to all pure techi's first but this is my fundamental take.
After Paul Tuckers comments the other night in Edinburgh I think any technical break here would be a good buying opportunity. BOE still saying 4% is stimulating the economy and short sterling pricing in another .5% . Against this you have old Greeny harping on about no US rise until Kingdom Come. Hard to get bullish dollar in this environment.