Last week I was analysing two currency pairs related to the British pound. Both pairs seemed to me to be the most predictable because of the Price Action formations that appeared on the charts of those pairs.
On GBPJPY we had bearish engulfing, on GBPUSD we had a growth channel and from both patterns the quotations broke down. In addition, growing uncertainty about the form in which the UK is to leave the European Union has a rather negative impact on the strength of the pound, which in the case of these pairs suggested a continuation of declines.
In my analysis of “GBPJPY – bearish engulfing on D1” I wrote, among other things: “ The Friday (20.09) daily candle formed the bearish engulfing pattern and today’s quotations indicate that price is leaving the formation and the probability of a return to the declines lasting from March this year.Analysing chart H4 we can try to determine the extent to which the price can move during the next sessions. The range of falls can be limited by the nearest demand zone starting at 132.90 “
As can be seen in the chart , the price has fallen even slightly below the level I had anticipated in the analysis. Further declines are possible, but only after reaching the important 132.15 level.
The second analysis from this week was : “GBPUSD – return to declines”. Here we had quite a clear situation, the price overcame the support of the canal and headed south.
In the analysis I wrote yes: “… a return to declines has begun, the price has hit the bottom of the canal and it is likely that this direction will be maintained in the coming sessions. The nearest demand zone starting at 1.2320 is the first supply target, and if it is defeated, we can expect an attack at 1.22, where there is an important level of support and resistance.
As you can see from the chart below, the price has reached its first target and it is very likely that another 1.22 will be in range in the next few sessions, especially since I have not previously noticed an H&S formation whose neck line 1.2387 has been successfully defeated and this supports the downward scenario.
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