Yesterday, a major buy signal was triggered on the GBP/USD chart. The buy signal was present on the D1 and W1 chart, and could potentially give us around 700 pips. The positive sentiment comes from the fact, that the price created an inverse head and shoulders pattern. Formation started in July and ended yesterday, with a breakout of the neckline (red). The potential target for this movement is the long-term pink down trendline connecting highs from 2014 and 2018. With this kind of setup and the present momentum, chances that we will get there are pretty high.
The next buy signal is the EUR/USD, which is moving slowly with a momentum that is low and resembles the sideways trend. Despite this, we are able to make higher highs and lows. Tuesday was important here, as the price broke the upper of the rectangle pattern (yellow), which in theory, brings us a buy signal.
Jerome Powell, Fed’s Chairman was a big help here as his testimony was perceived as dovish. That helped to weaken the USD. As for the target, we think about the upper line of the descending triangle pattern. That can potentially give us around 50 pips, which maybe is not a lot, but for sure enough for the mid-term traders.