A leading bank and an active player in the FX market has gone short in GBP/USD at 1.6133 with a stop at 1.6305. Why? It is because they have spotted a head and shoulders formation! Over the years I have seen hundreds of ‘potential’ head and shoulders that trap traders into getting short at all the wrong levels. Now this particular formation may well work, and I would definitely get my eyes examined again for not seeing something so clear (!) if the Pound collapses..but I would rather spend that money getting my eyes checked than throwing it to the market in this instance.. you get my drift?
Anyway, a downmove to 1.6035 is definitely possible, but I will be surprised if we dont get a recovery from somewhere there, and if it moves back above the so called neckline, it is going to cause some people to revisit their charts. I certainly will revisit them if the GBP/USD collapses below 1.6000