Forex Signals: New Impulse Wave on GBP/USD – May 29, 2014

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Forex Signals: New Impulse Wave on GBP/USD - May 29, 2014

Forex Signals: New Impulse Wave on GBP/USD - May 29, 2014

GBP/USD has made a strong break below the trend line and neckline of the complex head and shoulders pattern on the 4-hour time frame, forex signals that a new trend is about to take place. However, price may make a quick corrective wave pattern before resuming the drop.

The corrective wave could last until the broken trend line around the 1.6800 levels, which might act as resistance for the pair’s short-term rallies. Sentiment for the pound has shifted to a more bearish one after the Bank of England switched to a more dovish stance in their past rate statements.

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GBP/USD Forex Signals

With that, GBP/USD could be in for more forex signals of a selloff, as the US economy is doing pretty well. On top of that, the US dollar also gains support from falling yields and risk aversion.

In today’s schedule, only the GfK consumer climate report is due from the UK and, judging from the latest set of economic data, disappointing results might be seen. As for the US, the preliminary GDP reading, initial jobless claims, and pending home sales data are due. Among these, the GDP revisions could be the bigger market mover, as analysts expect to see a downgrade from 0.1% growth to a 0.6% contraction.

In that case, GBP/USD could make a corrective bounce back to the broken support area before another impulse wave is seen. A shallow pullback might last until the 1.6750 level, which is a minor psychological resistance.

On the other hand, a sudden shift in market sentiment to bring risk appetite back to the table could lead to considerable gains for the British pound and forex signals to jump back in the uptrend. This is a less likely scenario though, as global economic trends seem to be reflecting another slowdown.

To contact the reporter of the story: Marco Roemer at marco@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.