GBP/USD Forex Signal: Bullish Flag Pattern Signals Rebound
The pair will likely resume the bullish trend ahead of the UK GDP and US inflation data.
Bullish View
Set a buy-stop at 1.3880 and a take-profit at 1.3950 (bullish flag).
Add a sell-stop at 1.3800.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 1.3820 and a take-profit at 1.3750.
Add a stop-loss at 1.3900.
The GBP/USD pair retreated after the strong American vacancies data and as US bond yields rose. The pair fell to a low of 1.3850, which was the lowest level since July 27.
Strong US Rebound
The US economy has staged an impressive rebound in the past few months. This growth has been helped by the latest vaccination rate in the country coupled by the easy-money monetary policy by the Federal Reserve and the substantial stimulus by Congress.
Since the pandemic started, Congress has allocated more than $6 trillion in fiscal stimulus while the Fed has maintained low-interest rates and launched its biggest bond-buying program on record.
As a result, the labour market is booming. Data published on Monday showed that the country is facing its biggest labor shortage on record. The numbers by the Bureau of Labor Statistics showed that the economy has more than 10 million vacancies, which is the highest it has been on record.
Still, data published on Friday showed that the American economy is yet to fill millions of jobs that were lost during the COVID pandemic. Therefore, there is a likelihood that companies will continue adding millions of workers in the next few months even as the pandemic risks remain.
Looking at the economic calendar, there is no major economic event scheduled that will have an impact on the GBP/USD. Therefore, investors will keep focus on the upcoming US inflation numbers scheduled for Wednesday and the UK GDP numbers that are scheduled for Thursday this week.
Analysts believe that the country’s inflation remained being elevated in July as prices of most commodities rose. The median consensus is that inflation rose above 5% for the second consecutive month. Meanwhile, the GBP/USD will also react to the latest UK GDP numbers, which are expected to show that the economy rebounded in the second quarter.
GBP/USD Technical Analysis
The two-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few days. As a result, it has fallen below the 25-day and 50-day moving averages. This is a bearish signal. However, a closer look shows that it has formed a bullish flag pattern that is shown in black. In price action, this pattern is usually a bullish view. Therefore, the pair will likely resume the bullish trend ahead of the UK GDP and US inflation data.
Dogecoin Digs Itself Into A Bullish Pattern: How To Play The Break
Bitcoin (CRYPTO: BTC) will be accepted as payment at AMC Entertainment Holding Inc.’s (NYSE:AMC) theaters by the end of the year, much to the dismay of Dogecoin (CRYPTO: DOGE) enthusiasts who tout the Shiba Inu cryptocurrency the “people’s crypto.”
The adoption of cryptocurrency as payment by large companies adds validity and utility to the space and opens the door for more coins to eventually be accepted.
Blockchain analytics firm Chainalysis sees the value of Dogecoin and on Tuesday announced it had expanded coverage to include the coin saying the crypto had become the “most frequently requested” new coin for the company to cover from its customers in the public and private sectors.
Dogecoin has spent the past four days pawing itself into a bull flag pattern and looks set to soar.
See Also: How to Buy Dogecoin
The Dogecoin Chart: Dogecoin shot up about 28% on Aug. 7 and bust through a resistance level near the 23-cent mark. It has since been consolidating in a tightening range. The single-day increase paired with three days of consolidation has created a bull flag pattern with the pole created Aug. 7 and the flag created between Sunday and Tuesday.
The flag of the pattern is developing into a triangle pattern and Dogecoin is set to meet the apex of the triangle on Aug. 13. Technical traders should watch for high volume when Dogecoin breaks either bullishly up or bearishly down from the triangle to know whether the pattern was recognized.
The three-day consolidation has helped Dogecoin to cool down its relative strength index (RSI) which was approaching oversold territory at the 71% mark.
On Tuesday Dogecoin’s RSI had come down about 10% to a much more comfortable 61% level.
Dogecoin is trading above the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending above the 21-day, both of which are bullish indicators. Dogecoin is also trading above the 200-day simple moving average (SMA) which indicates overall sentiment in the crypto is bullish. The 200-day SMA has been guiding Dogecoin higher for the better part of the past eight months.
Bulls want to see big bullish volume enter Dogecoin to break the crypto up bullishly from the flag pattern. If the flag is recognized and Dogecoin breaks to the upside the measured move could bring the crypto up to about the 30-cent level. Dogecoin has overhead resistance at 27 and 31 cents.
Bears want big selling pressure to push Dogecoin down to break bearishly from the triangle and below support at 23 cents. If Dogecoin can’t hold the level as support it could fall back down toward the 20-cent mark.
Image by Ishwar Artist from Pixabay
Gold Fractal Bodes Well For Bitcoin If Bull Flag Confirms
Bitcoin price has turned bullish over the last three weeks, and looks to be breaking up and out of a near textbook bull flag pattern. The only problem is that the pattern could be a page out of gold’s playbook, which recent price action would suggest the top cryptocurrency isn’t yet out of the woods.
Here is a closer look at the ominous gold fractal that could act as a preview of what’s to come across the cryptocurrency market before any upside continues.
Gold Versus Bitcoin Price Fractal: Matching Textbook Bull Flags
All throughout 2019, Bitcoin and gold had been performing nearly neck and neck, when at some point gold took the lead and the crypto market took pause. Once gold set a new all-time high, the precious metal pulled back and capital began to flow into crypto.
The scarcity of crypto can create an environment for exponential price action, and with trillions from gold coming in, the market cap of BTC increased by as much. Gold’s rally peaked months before the crypto bull run did, and it could potentially be used as a roadmap in Bitcoin.
Related Reading | Astro Crypto: How Solar Cycles Could Influence Bitcoin, VIX, & The Stock Market
Both Bitcoin and gold have similar traits, and both assets could be forming a massive, textbook bull flag. The key difference, is where the two assets are in the chart pattern.
Will BTC follow the XAUUSD bull flag? | Source: BTCUSD and XAUUSD on TradingView.com
Will Crypto Follow The Fractal Breakout Pattern?
In gold, the flag broke upward several months ago, but bears have stayed relatively strong so there have been multiple retests of downward sloping resistance as support.
Each retest has held, including last night’s “flash crash” caused by weekend low liquidity conditions and holidays in Japan and Singapore, according to Marcus Garvey, head of metals strategy at Macquarie Group Ltd. Even as deep as the flash crash got, it has only left a wick back into support.
Related Reading | Gold Versus Bitcoin Chart Makes It Seem Like Bull Run Has Barely Begun
Bitcoin on the other hand, is only now breaking up from the top trend line of bull flag resistance. If it follows the path of the primary precious metal it was designed after, digital gold could spend ever weeks consolidating further before the pattern fully confirms and the resulting next wave begins.
The bull flag target on the XAUUSD trading pair is around $2,600 per troy ounce of the gold standard. In Bitcoin, the target is closer to $150,000 per coin, making the cryptocurrency market the more lucrative of the two plays. The top cryptocurrency by market cap hasn’t fully completed a breakout of the pattern just yet, so it is too early to tell if the fractal will be followed further.
Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com