Trade Leader Or Kahana presents analysis of the GBP/USD.
The GBP/USD monthly chart is at a crossroads, it could embark on a downtrend if the price breaks the flag (marked in green) or an uptrend if it breaks above the right triangle (as shown in pink).
If the price breaks below the bottom line of the flag (1.3503) and posts a daily close below this support level we will know we are heading down. A decline of approximately 3,000 pips is expected, the amount of pips of the flag pole. There are a couple of things you must note before taking the trade. This is a monthly pattern. It could last more than one month before reaching the final target (1.0408, as marked in blue). Naturally, there may be corrective gains during the expected downtrend but the weakness is expected to be significantly stronger.
If a daily zero line reject or Vegas for short is parallel to the daily candlestick which is closing below 1.3503, I will join the trade right away but if there is no pattern in Woodies CCI on the daily chart, I will observe the hourly Woodies CCI and look for ZLR and/or Vegas Trade (VT) in order to join the monthly trend.
The second option is the more likely one to happen in my opinion: Pound Dollar is about to break higher. There is a strong scenario for major gains. GBP/USD built a right triangle (as shown in pink) resulting from a bottom line which is a bullish trend line. The price reached this level multiple times but was supported by it. The upper line in pink is a strong resistance. The last target is the sum of pips of the plumb.
In order to join the bulls, the daily candlestick should close above the top line of the right triangle. The final target can be found at 2.0367 (in grey), which are more than 3,000 pips. In this scenario I will also check the pattern in Wooodies CCI in order to join the strong gains. If a daily ZLR or Vegas are parallel to the breakout I shouldn't wait and enter this trade but if there is no technical pattern in the daily Woodies CCI I will move to the 1hr chart and search for a pattern.
The second scenario is more reasonable since the monthly Woodies CCI is at the beginning of its established uptrend. The 50 CCI (in Black) was in the -200 and made two hills in the -100, then crossed the zero line and opened the first green bar which represents the uptrend has just began.