GBP/USD Forming Triple Bottom Reversal Pattern
Position: Long GBP/USD
Initial Target: 1.3445 (+708-pips, September 6 high)
Stop: 1.2415 (-322-pips, trail below daily 13-EMA)
Reward/Risk Ratio: 708/333 = +2.20
GBPUSD looks to be forming a ‘triple bottom’ reversal pattern – a signal that the pair’s long prior downward trend is about to reverse, possibly reaching up to the previous reaction high.
Three bottoms can be better than one -- this pattern is relatively rare and is usually an extension to a double top. When it does occur it is usually formed at the end of a long trend. The triple bottom formation appears in the GBPUSD’s daily and weekly charts.
Looking at the weekly chart, the triple bottom would be confirmed if the pair breaks the ‘base’ around 1.2737 – the high of November 28 last year. If that’s broken, it will signal a bullish move to the first swing target around 1.3352, the high of August 29. If that’s cleared, an eventual return to pre-Brexit vote levels wouldn’t be so far-fetched. A further break above the September 6 high of 1.3445 could ultimately instigate a return to pre-referendum levels above 1.4500.
Chart 2: GBP/USD Daily Timeframe (June 2016 to March 2017)
--- Written by Oliver Morrison, Analyst
To contact Oliver, email him at email@example.com
Don't trade FX but want to learn more? Read the DailyFX Trading Guides
If you’re looking for ideas more short-term in nature, please check out our IG Client Sentiment Data
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.