The first quarter of this year has not been kind to the British pound, which lost more than 13% to the US dollar. However, the last two weeks of May saw a fairly strong rebound from the low of 1.2150. Last Friday, the rate reached 1.2670, where support and resistance level is located.
The recent increases caused a change of mood on the MACD – after the minimum was established, the oscillator entered an upward phase (green). This week on MACD also started upward and there is a chance to close the week higher than Monday’s opening.
On the H4 chart a characteristic inverted H&S formation was formed – (head and shoulders). Such formations, when they appear after a series of falls, are often the signal of a change of trend. Currently the price is above the neck line. Breaking the resistance at 1.2670 may open the way to the supply zone located at 1.2760. In the longer term, increases may reach 1.3000, which would be the realization of the theoretical range equal to the height of the H&S formation, which is about 450p.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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