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Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce

Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce

David de Ferranti, Currency Analyst

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Talking Points

  • GBP/USD Technical Strategy: sidelines preferred
  • Range between 1.6610 and 1.6765 on 4 hour remains intact
  • Shooting Star warns on daily warning of declines

The GBP/USD four hour chart has posted a Bullish Engulfing candlestick formation which may be hinting at bounce for the pair in the session ahead. The pattern is made more noteworthy as it has appeared near the psychologically-significant 1.6600 level.

However, there appears to have been little upside momentum following the bullish reversal signal, as such a bounce may fizzle, particularly given resistance looms overhead near 1.6640 (the 23.6% Fib Retracement level).

Turning to the daily chart, a Shooting Star formation continues to warn of a drop for the Pound over the near-term. This comes in addition to a shift in the trend (signaled by the 20 SMA). A break below strong buying support at 1.6600 would be needed before looking at new short entries.

Confirm your chart-based trade setups with the Technical Analyzer.

Forex_Strategy_-_GBPUSD_Bullish_Engulfing_Pattern_Hints_At_Bounce_body_Picture_3.png, Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce

4 Hour Chart - Created Using FXCM Marketscope 2.0

Forex_Strategy_-_GBPUSD_Bullish_Engulfing_Pattern_Hints_At_Bounce_body_Picture_2.png, Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce

Daily Chart - Created Using FXCM Marketscope 2.0

Forex_Strategy_-_GBPUSD_Bullish_Engulfing_Pattern_Hints_At_Bounce_body_Picture_1.png, Forex Strategy - GBP/USD Bullish Engulfing Pattern Hints At Bounce

Weekly Chart - Created Using FXCM Marketscope 2.0

--- Written by David de Ferranti, Market Analyst, FXCM

Contact and follow David on Twitter: @Davidde

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