Last week the September British Pound ran into resistance at 50% of the break from 1.6276 to 1.5266. This price level is 1.5774 with the high reaching 1.5773. Additionally, the market also tested a steep downtrending Gann angle from the 1.6276 top. This set-up formed a small resistance cluster that traders respected. The subsequent sell-off triggered a break, but in my opinion did not form a true closing price reversal top since the last rally didn’t fall into the 7 to 10 trading day range.
The higher-high, lower-close on the weekly chart does indicate weakness but it may only be in the form of a short-term follow-through to the downside. Based on the near-term range of 1.5266 to 1.5773, this week traders should look for an early test of the uptrending Gann angle at 1.5586, followed by a possible trade into the retracement zone at 1.5520 to 1.5460.
Weekly September British Pound Pattern, Price & Time Analysis
With the main trend down on the daily chart because the recent break took out the swing bottom at 1.5611, the move to the 50% price level was expected. The key at this time is determining whether there is enough momentum to trigger an even further break. Based on the .1010 four-day break from 1.6276, we could be looking at a move to 1.4763 by June 28 if the British Pound follows the same swing cycle.
Although it sounds like I’m predicting a sharp break over the next 4-days, I am a little leery about the market reaching this price and time target because of the possibility of a secondary higher bottom. The short-term range of 1.5266 to 1.5773 is saying this market may only break back to the 50% to 61.8 percent level at 1.5520 to 1.5460.
With the Gann angles and the retracement level so close to each other, trading conditions could be choppy. Watch for a two-sided trade early in the week until the traders can determine the direction they want to take.
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