There’s no shortage of pending reversal patterns at the moment. We discussed the potential head and shoulders on the GBPCAD less than 24 hours ago, and that pair tested neckline support earlier in today’s session.
We also have the EURAUD that could be forming a 1,000 pattern of its own.
Another currency cross in the same boat is the GBPAUD. There’s a head and shoulders pattern forming that if confirmed could result in a 1,200 pip decline. I first pointed this out back on June 26th.
In fact, the 1.7940 handle I mentioned in that post has stood as resistance since the June 19th session.
Here’s a view of the last twelve months:
The left shoulder peaked in December of last year, the head was carved between March and April of this year, and the right shoulder is in process.
Despite today’s bounce, the GBPAUD closed below a key level yesterday. The 1.7740 area has served as a pivot since the pair closed below it on May 21st.
With yesterday’s sub 1.7740 close, any retest of the area as new resistance should attract sellers. To the downside, we have neckline support in the 1.7500 region. The level extends from the swing low of the left shoulder that developed on January 11th.
In summary, this pending head and shoulders won’t be confirmed until sellers manage a daily close (New York 5 pm EST) below the 1.7500 area. However, 1.7740 should serve as resistance in the meantime.