FxWirePro: GBP/USD’s 3-Black Crow Pattern at Channel Support Breach More Imminent than Dragonfly Doji and Hammer Occurrence

Chart and candlestick patterns occurred: shooting star has occurred at 1.3190 levels where stiff resistance is observed at 1.3217 levels (refer 4H chart), one can observe the bearish sentiments on failure swings at that juncture.

While 3-black crows during the consolidation phase have occurred at 1.3525 levels which are bearish in nature. Whereas dragonfly doji and hammer patterns have occurred at 1.3258 and 1.3203 levels respectively (refer weekly chart).

But the bears in the intermediate trend manage to breach channel support after this bearish pattern.

Consequently, the price slides below DMAs, EMAs and MACD with bearish crossovers ever since the occurrences of the above traced-out bearish patterns, let’s not forget we cannot afford to isolate this signal, both leading and lagging indicators in tandem with price dips.

The intermediate trend so far was spiking through rising channel (weekly chart), but for now, bears have managed to breach below this channel support. In addition, 3-black crow pattern candles have occurred at the same levels which are again bearish in nature, thereafter, considerable slumps below EMAs are observed on this timeframe.

Both momentum oscillators (RSI & stochastic curves) have shown constant downward convergence on both timeframes that indicate the strength and the momentum in the bearish trend. MACD and EMAs show bearish crossovers that indicate bearish swings to prolong further.

Trade tips:

On daily trading grounds, at spot reference: 1.3178 levels, we advocate buying tunnel option spreads using 1.32 as upper strikes and 1.3144 as lower strikes. Tunnel spreads are the binary version of the debit put spreads, the strategy is likely to fetch positive yields as long as the underlying price keeps dipping but remains well above lower strikes on binary expiration.

Alternatively, one can initiate shorts in futures contracts of mid-month tenors with a view to arresting potential downside risks ahead of UK’s data announcement of manufacturing PMIs. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly GBP spot index is flashing 32 (which is bullish), while hourly USD spot index was at -46 (bearish) while articulating (at 06:17 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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