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Dec 24 - 06:55 AM

GBP/USD - COMMENT-Sterling Reversal Warnings Drawing Confirmation

By Peter Stoneham  —  Dec 24 - 06:29 AM

Sterling is set to record a strong close on the week versus the U.S. dollar and in the process will confirm the trend reversal warnings given by the previous two weeks' Doji candles.

Doji candlesticks, tight open and closes, can hint at market indecision and warn of consolidation or a change of direction.

This week's 2% rebound out of a 1.3175 low and potential close inside the weekly Ichimoku cloud could signal a reversal when taken in conjunction with the Doji candles.

A close above the 10-week moving average, 1.3426, would add strength to the reversal call.
The average has contained sterling since early November and sits just above the weekly Ichimoku cloud base at 1.3356.

For longer-term bull targets, an Ichimoku cloud twist out to May at 1.3692-98 might be ambitious but twists can appear to attract price.

Closer to market, a 1.3498 key 50% Fibonacci retracement level off the 1.3834-1.3162 October-December drop is a viable near-term target.

A potential December Harami candlestick (real body inside month) would be another signal there of reversal risk.

For more click on FXBUZ


GBP/USD weekly Ichimoku chart: Click here

GBP/USD daily candle chart: Click here

GBP/USD monthly candle chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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