Intraday GBP/USD Falls Through Falling Wedge Support Level

The 60 minute GBP/USD (aka the "cable") has been trending lower within a mark down market cycle since the New York session Monday.  This downtrend has created the perfect environment for the Continuation Falling Wedge chart pattern that has recently triggered and is now a Complete Pattern alert.

Continuation chart patterns indicate that they will resume the current direction of the trend.  In trending chart patterns like a falling wedge or down channel the direction should be down. They should ideally be accompanied by a decent Initial Trend reading (R).   In this alert the Initial Trend is high enough to show that the trend is still intact.  However the momentum of the breakdown is low.  This should be taken within the context of the chart pattern's direction.  In a trending chart pattern, even during breakdown, there is not as much a need for Breakout (S) momentum since the trend itself indicated a certain momentum.  This would not be the case if this were a congestion or consolidation chart pattern where a higher breakout reading would be desirable.

The Falling Wedge chart pattern should not be considered just a trend follow alert.  As this pattern did break down through the support line (Y) for a continuation entry, a short off the downtrend resistance line (X) would trigger a corrective entry.  This is also a continuation or "trend following" entry.  If prices were to break the downtrend resistance line (X) to the upside it would be a reversal of the current trend and a buy trigger.  This trigger could certainly use momentum and a higher Breakout reading since a reversal would ideally be accompanied by some momentum.  This momentum is similar to a congestion or consolidation breakout.

As prices are now heading lower expect support between the Forecast Region (Z) of 1.6260 and 1.6230.  Pay particular attention to the 1.6250 major psychological area that is within the Forecast Region as it will be a hurdle.

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