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Sterling Testing Neck Line of Head and Shoulders Bottom
By: fxvictory Date: October 28, 2014, 11:34 am
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[glow=red,2,300]Sterling Testing Neck Line of Head and Shoulders
Bottom[/glow]
The unexpected drop in September durable goods orders and weak
details, play on fears the US economy is losing momentum. The
dollar was pushed lower. This enabled sterling to test the neck
line of a head and shoulders bottom pattern that we had pointed
out. It is depicted below in the Great Graphic from Bloomberg.
The left shoulder was carved on October 3-4 around $1.5950. The
head was by the spike to $1.5875 on October 14-15. The right
shoulder may have been set by last week's test on $1.60. The
neckline comes in today near $1.6160. The measuring objective
would project toward $1.6460. The would put it between the 38.2%
and 50% retracement targets of the down move from the mid-July
high just shy of $1.7200 ($1.6375 and $1.6530 respectively). The
latter near the mid-September spike.
We have noted some other constructive technical indicators. The
recent lows in sterling have not been confirmed by the RSI or
MACDs. This has created bullish divergences. The five-day
average is poised to cross above the 20-day average today.
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