As evident from the monthly charts, Sterling Pound has been in a long-term down trend as depicted by lower low lower high formation. It posted a low of 1.145 in Oct 2016. Eventually, it found support there and over the past few months it has been trading in a range of 1.204 and 1.264.
On analyzing the performance of sterling pound for an extended period, we found that the it is hovering near the support levels. Also, on weekly charts, it is showing the signs of bottoming out and the medium-term trend reversal is in offing. There are chances of double bottom formation on the charts. In some cases, a double bottom formation results in an instant rebound, whereas it might take a few months to develop at other instances. In this case, the Sterling Pound is consolidating over the past few months and making a base formation.
Currently, on the weekly charts, Sterling Pound has managed to close above previous swing high. A trend reversal is indicated by a higher swing high. Also, it managed to sustain above the previous swing low, indicating support at lower levels. On analyzing the weekly charts, we believe the medium-term bottom is in place. Our argument was supported by fact that, on quarterly chart, it formed Bullish Harami (31/03/17) after the substantial down trend. Since, then it has been trading upward. However, close above the 1.294 will confirm pattern strength.
From the daily charts, we believe Sterling Pound is consolidating in a horizontal channel over the past seven months. The Sterling Pound has tested the trend line of a channel on numerous occasions and found support at that level. The Sterling Pound appears to move higher. It has also, managed to close above the upper trend line of the channel on 18 April 2017, suggesting breakout on the upside. The implication of the said pattern is bullish in the near-term. In addition, close above the 200-day SMA corroborated the above view. On the weekly charts, it is maintaining above the previous swing low. The above technical studies suggest the possibility of continued rebound in the medium term.
The current price action and the technical studies, suggest Sterling pound will see further rise in the near-term. Daily and weekly studies are pointing towards the possible test of the 1.323, 1.365 and 1.387. .
Any close below 1.229 would negative the above bullish view.
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