I am studying the daily chart of the GBP/USD (finally! I have finally finished packing up my old home and I can get some quality time in front of the markets) and I find that in the last 2 sessions (while I was packing boxes), cable has set a textbook-perfect double bottom at 1.6111 (circled above). What is currently playing out, is a mini-breakout after that double bottom. But I’m starting to think that this may be the beginnings of a reversal of the current downtrend.
- The technical double bottom on the ST chart after breaking major support at 1.6250. A break of this level should have seen prices completing the quarter to 1.6000. Instead, the trend exhausted and retreated back to 1.6250. Twice.
- Counting the waves (not Elliott style but Yoltov style), the downtrend was actually FOUR waves. That is an overextended trend that, while it did break major MT support at 1.6250 level, didn’t make it to 1.6000 as expected after the break.
- Due to the double bottom, the wave counter (if you count waves) has been zeroed out. This could very well be a first bullish wave developing on the charts right now. A break of 1.6372/80 confirms it.
- Non-farm payrolls (NFP) will not come in better than last month, as it is expected to do by economists. If the released number disappoints with higher layoffs then the USD could see a serious correction. If severe enough, we could see a reversal of the current downtrend in the GBP/USD.
As always trade what you see, not what I think.
