Well, last week was memorable, the interesting common factor in these market anomalies is that the early warning signs are there in both the technicals and the fundamentals, so although these events are shocking to the market they’re not entirely surprising.
A quick review of last week’s analysis for GBPUSD, which failed to continue higher after breaking above the range.
It’s important to remember that even though your criteria for a market bias may well be met, if there isn’t enough genuine underlying market momentum in your favour, then it’s unlikely to push through.
Strong momentum is what we want when price consolidates before a potential break out in the direction of the trend. This is why it’s preferable to allow price to pullback and test the broken level and confirm it as either support or resistance before considering whether the set-up is valid; the level gives us the where, the right price action signal is our when and how we enter the market.
If I had one criticism of last week’s GBPUSD analysis, it’s this, the close of the 08/16/15 Weekly candle that had just broken above the range, had not quite exceeded the high of the 07/26/15 Weekly candle at 1.5689. In basic terms, bullish momentum was potentially drying up. See Weekly chart below.
As I’m sure you’ve noticed markets are a bit of mess at the moment, but I will be posting any charts that start to show clarity.