20 week trough bounce in GBPUSD, where to expect resistance?

20 Week Cycle in Progress

This is a follow up to the previous post about the current cyclic nature of the GBPUSD pair. There is a 20 week / 80 day (at least) trough playing out to the upside. I am tracking this, have a long position and will now explore where possible resistance could take place. This pair is long term bearish according to the analysis with a straddled 18 month trough late last year.

Lets dive in:


Firstly I have a target of around 15345 for the 20 day FLD projection. This I would expect to be hit and overshot. Should it not be that is a bearish sign. That target puts price just under the 80 day FLD. I would expect resistance there (along with the 80 day VTL) and price to fall into the 40 day trough from which it should then break the 80 day FLD – creating a projection up to the 20 week FLD. This projection may well be undershot.

I would also like to see the 80 day VTL (blue line) crossed by price, strongly. This would confirm the 20 week cycle that is playing out. I expect though that this may provide resistance at the peak of the 40 day cycle and could be a good shorting opportunity, we will see.

The shape of this first 40 day cycle is crucial in my opinion. I will want to see a bullish 40 day cycle to be confident of meeting the projections above. Given that price fell quite deep into the first 10 day cycle of this 80 day cycle does not mean price is not bullish for this first 80 day – it just means those traders who do not understand cyclical nature were still shorting! This is evident in the short covering yesterday resulting in a strong move up after price had touched back on the 20 day VTL (purple).

So, in summary for this pair, looks good for more upside but be aware of the bearish underlying trend.



Leave a Reply

Your email address will not be published.