Short GBPUSD to test 1.21151 level of the broadening channel

Oct 1, 2019

GBPUSD is a good sell right now as there are a number of patterns that point towards the southward trajectory of the pair. The pair initially went above the broadening channel, but later on reverted back with a head and shoulder pattern (blue shaded area) which make bears on the winning side, with the target of testing the lower trend line of the channel at 1.21151. In other words, follow the red arrow. Meanwhile, the pair is taking support from the 1.22859, which might become the neckline for the second head and shoulder pattern (highlighted by green area). The second shoulder of the pattern has not formed yet, which can make the prices turn to 1.24043 resistance level. In other words, the pair can follow the path highlighted by blue arrows. 10 to 20 pips above this resistance can be the stop loss for this entire trade. Furthermore, on the weekly chart, the pair has formed an evening star pattern that again supports the bearish argument.