GBPUSD Completes a Three Drives Pattern Setup
trade setup gpusd daily 4.8.2020

GBPUSD Completes a Three Drives Pattern Setup

Welcome Back! Long time! Happy to have you again.

I am starting with two bearish trade setups on the GBP/USD and the EUR/AUD. Lets dig into the charts.

GBPUSD Three Drives PRZ Was Hit.

GBPUSD three drives pattern trade setup

GBP/USD hit the PRZ for a three-drives pattern at 1.3140. Although I prefer symmetry of the 2nd and the 3rd waves as explained in the how to trade the three drives pattern tutorial I published earlier. The trade setup remains strongly valid and supported by more than one bearish signal.

The price action has shown signs of valid resistance around that area, as it formed a shooting star bearish candle, followed by a hanging man candle, indicating hesitation and a possible reversal area. That happens while RSI move above 70.

If we look left, the 1.3200 (which is just 60-pips above the PRZ) has formed a clear resistance area, rejecting the price sharply lower towards the 1.1410 low recorded in march.

Having that in mind I am looking for a short term downside reversal. Targeting a retest of wave two high at 1.2813.

EURAUD Sideways Range Trade Setup

EURAUD sideways range trade setup

EUR/AUD has been trading in a side range for the past couple of months. Recently, the price has hit the top of the sideways range, while RSI hit overbought area.

The 200-days simple moving average is also near the top of the range, giving further weight to the ceiling of the range.

Multiple bearish reversal candles has formed when the range resistance area was tested. Meanwhile, RSI signaled a slight bearish divergence.

The most recent bullish wave may have taken the shape of a short term rising wedge. And possibly it’s being broken at this moment.

In this context, a bearish trade setup is present, with a first target near the middle of the range around 1.6350, and a second target at the bottom area of the range(shaded in light red). Note that the closer the entry to 1.6550 the better the risk-reward of this trade.

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