'Market and Human' Psychology perspectives with tips on how to avoid common mistakes by 
Ever notice that. That there sometimes seems to be a tension that builds in a room. And then… all hell breaks loose. This is the feeling I’m getting right now about the FX Market. Do you fell this as well?
The USD has been strengthening for weeks and sooner or latter traders are going to align there overall sentiment and emotions and send the markets the other way.
sometimes when this happens a pattern know as an ending diagonal develops (Elliott Wave). This usually signals a strong reversal if indeed the pattern is correctly identified. I say this because there is always the chance of a miss-read.
What I watching right now is the possibility of an ending diagonal on the GBPUSD. The pattern shows up because there is a fight going on between the Bulls and Bears. So a relatively consistent pattern shows up at the end of long market move that once complete gives way to a sudden correction.
Here’s a snapshot of what I’m watching. I will wait for the pattern to show sings of completion and when I see an engulfing candle in the opposite direction I will become a buyer.
Cheers and good trading.
Dear Pierre,
I really feel the same as you said some tension is in the air. I would like to ask you, such patterns when they do brake out is it that an important change in trend? It means GBPUSD should go up for a few weeks. what is your expectation for this pair?
thank you,
regards,
Vytas
Hi Vitas.
Indeed that is usually the case. However one must be cautious as always to wait for a definite sign of a top or bottom is in place.
About 50% of the time there is the potential for one more final thrust in the direction of the current trend.
I noticed the market opened with a very strong continuation move down on this pair. A turn around at or near the current levels 1.81ish should be watched closely.
Dear Pierre,
I would really appreciate, your opinion about GBPUSD. It just doesn’t want to bounce..
regards,
Vytas
Hi Vytas.
Indeed it appears a bottom is not yet forthcoming. I would suggest at this point another swing-low is likely before a larger reversal starts.
Be careful here, as support could be as low as 1.75
Pierre