False Sell Signal on the GBP

Yesterday, GBP gave a strong sell signal, not only on the Cable but on the other instruments too. Today, those signals are being denied, which at some point is also a great opportunity. It is a signal to open a position in the opposite direction.

GBPUSD bounced nicely from the neckline yesterday and it was looking like we are about to see a sweet drop aiming the long-term up trendline. This drop did not happen and today, the price is testing the neckline again. The comeback is so strong that we have a high chance of breaking the neckline, which will cancel the H&S formation. Once the day will close above the 1.409, the buy signal will be triggered.

EURCAD is having a nice head and shoulder formation and we are very close to the neckline. A breakout here should trigger s a sell signal with a potential target being 560 pips lower! Definitely, a place to be for every trader but do not go too early. For a proper signal, we should see a breakout of the neckline first.

Yesterday, GBPJPY created a great sell setup. We had everything. The price broke the up trendline, created a bearish wedge, bounced from the resistance and made a head and shoulders pattern. We broke the lower line of the wedge and a neckline. In other words, that was the ultimate sell signal. Dream come true for every price action trader. Guess what. Today the price is trading higher. Sometimes it happens like that so you always need a stop loss order. Once the day will close above the neckline, the sell signal will be denied.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis