GBPUSD is in Extended Bearish Divergence With Risk Towards 1.5600 Levels; 1.5840 & 1.6060 Are Important Pivots !

As shown on the daily chart , the pair breached above the 70 at 1.5882 last Feb , showing strong bullish momentum, later the pair continued to rise and broke above 1.5882 while RSI declined .
A bearish divergence means the chart shows rising price, but the indicator highs, in this case the RSI highs are flat or declining,this suggests a lost of momentum, it should be noted that divergences can be extended in a trending market especially with high volatility pairs  !!!

Well, the extended bearish divergence is a bullish reversal in short term suggests further gains before   possible (final) topping !!

In our case with GBPUSD, after breaking above the 70 level,and topping at 1.5882 the pair continued to rise and topped at 1.5928 , 1.5991, 1.6002 and 1.6062, while RSI continued to decline showing a lost of momentum.

According to daily RSI , a break below 30 would confirm the last top at 1.6062?!!!

With yesterday's close 13 Apr 2012 , According to R% indicator , we have bearish breakout at 1.5840 that suggests further declines and losses towards 1.5600 , a clear break below 1.5600 would increase the risk towards 1.5400/300 levels..

But we still need a daily close below - 1.5840 low of 13 Apr 2012 - to confirm the bearish breakout, remember this level is the pivotal level ( 50% retracement) of the last rally  1.5601 / 1.6062 , so a clear break below 1.5840 should test at least 1.5600 levels ...

Important Notes:

1- Once we have a daily close below 1.5840, the next day don't wait for a retracement to short, probably the pair would resume falling without any correction , make you target around 1.5600 , but Next Monday - 16 Apr 2012 -  If It doesn't close below 1.5840. we may witness a delay of  the down-move testing 1.5970/80 area , that would be another opportunity to short.

2- RSI test to 40 level may push up the pair a little bit testing the broken level 1.5840 , that would be a great chance for taking another short .

3- RSI break below 30 would confirm the top at 1.6062 (possible high of 2012).

4- Only a daily close above 1.6062 would eliminate this negativity , suggesting that there's no enough momentum to break down , and the pair needs to move higher to gain the needed momentum to move down....

Best Regards

Saturday 14 Apr 2012 03:12 PM

Views: 929

Tags: GBP/USD, GBPUSD

Comment by Haitham653 on April 16, 2012 at 8:20am

Very Important: If today's close is below Friday's low 1.5840 ,then.. It's just a matter of time before testing 1.5600, incase we witness any bullish correction , that would be a great chance for taking a short..

Regards...

Comment by Haitham653 on April 16, 2012 at 8:30am

If today's close is above 1.5840, a bullish correction towards 1.5900/1.5950 is suggested where sharp sells are expected to see !!!

Comment by Haitham653 on April 19, 2012 at 5:10am

Exactly as said before, after failing to make a daily close below 1.5840 low of 13 Apr 2012 , the pair pulled back towards 1.5600 levels..

This scenario suggests that the extended bearish divergence is still active and strong , the bearish momentum wasn't strong enough to break below 1.5840 so this is why we witness the pullback , to gain the needed momentum to move down again ..

Since we are in extended bearish divergence , any rise is supposed to follow by a big fall , keep that in mind .

At this moment the pair testing 1.6062 high of 02 Apr 2012 , below this level sharp sell is expected , incase the pair manage to break above 1.6062 , bulls should be run out of gas around (1.6160 / 1.6200)  where sharp sell is excepted 300 / 400 pips before the next move ?!! 

Regards

19 Apr 2012 05:10 AM

Comment by Haitham653 on April 19, 2012 at 5:18am

Recommendations : observing short signal around 1.6030 , stop above 1.6200 , target 1.5840 & 1.5600...

Best Regards

19 Apr 2012 05:18 AM

Comment by Haitham653 on April 20, 2012 at 2:25pm

Check the daily chart posted below , we have rising wedge pattern on daily chart - bearish reversal  - with extended bearish divergence , I think the pair should top very soon between 1.6100/200 levels...

 

Comment by Haitham653 on April 21, 2012 at 9:05am

After having a daily close above the previous top - 1.6062 - a consolidation is suggested before the next fall, but remember  a test to 1.6160/200 is suggested before the next fall ?!!!

Anyway , the rejection from 1.5840 , and the break of 1.6062 confirms that the extended bearish divergence is strong and active , there wasn't enough momentum to break below 1.5840 , so the pair moved higher to gain more momentum to fall again ?!!!!  

Comment by naivetrader1 on April 21, 2012 at 9:19am

The rising wedge with bearish divergence is being fascinating! We still have consistent HH & HL. Nervous eyes can't ignore RSI trying to peep out / up (???) This all is at the back of better fundamentals, in the UK, in last week. 

Comment by naivetrader1 on April 21, 2012 at 9:21am

Can you figure out a tentative time frame for the wedge break out? Is it a change in trend for cable as well? Even if it is .... it still needs to retrace, for further gains ahead ..... 

Comment by naivetrader1 on April 21, 2012 at 9:23am

& finally, to put the things in to context, what's your view on the $? It needs to lift itself for it's pairs to go down....

Comment by naivetrader1 on April 21, 2012 at 9:25am

May be $ is waiting for early / mid May..... in accordance with the age old theory (equity) sell in May & go away???

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