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lets have a look at an interesting situation on the monthly/weekly chart of the GBP/USD.
Observing the price movement on the monthly time frame, we can see that -
1.) Price has found support at the 50% fib retracement of the move from - Low of June 2001 (1.3680) to the High of Nov 2007 (1.2115)
2.) It has also found support on a trend line of the previous up move.
3.) Price makes symmetrical moves and one can see it has also completed a move similar to an earlier wave. These symmetrical distances often hold as support or resistance.
Now this could be looked at from a harmonic pattern view, since the first retracement ‘B’ has stopped at the 50 Fib level.
Hence we could be looking at price to rally and form the ‘C’ of the pattern, which could be 61.8 to 78.6 of ‘A-B’.
There also seems to be a bullish hidden divergence, though it’s not yet completely confirmed.
But price has found support at the fib fans plotted on the points of the divergence, which is usually a strong confirmation of a support zone.
Now this move within the bullish hidden divergence also formed a bullish “Bat” Harmonic pattern.
If we look at this pattern closely, we can see that it confirms to the specific fib ratios for the harmonic.
We follow the “If-The” principle and wait for price to confirm the moves to the long side.
The harmonic patterns usually achieve an initial measured move of the wave B-C.
Now that price has found support at this zone, the most likely price objective would be wave distance B-C, measured from the low of D.
If price gives a convincing close above this level, then we can expect the larger objectives of this harmonic pattern to be met.
Sunil.
Can you explain what you mean by bullish hidden divergence. I understand divergence as it applies to TA indicators but can’t understand your reference in this context.
hi
is that mean that we can see gbp in 2.00 soon?
thanks