Pound Pullback?

There’s a lot of talk this week about the pound dollar, and specifically that we are approaching a resistance level. What has happened to the pound historically in similar situations? Will it break through?

EidoSearch looked at two patterns to see how investors behaved when the pound was trading similarly in the past. First, we looked at the pattern from the low on March 14th of $1.49 to yesterday’s close, and then we looked at the previous high of $1.57 on June 18th of this year through yesterday. In both instances, we looked at when these patterns have occurred historically with the GBP/USD only.

The March 14th pattern shows 10 historical occurrences using a minimum correlation score of .65. In 8 of those 10, the following 1 month period was down with an average pull back of -1.35%. For the June 18th pattern, we used a bit higher minimum correlation threshold of .7 (shorter pattern with more occurrences), and 19 of the 28 occurrences were down in the following 1 month period.

Pound Price Pattern starting March 14th

March 14th Pattern – 1 month forward returns of 10 most correlated historical occurrences

Pound Price Pattern starting June 18th

June 18th Pattern – 1 month forward returns of 28 most correlated historical occurrences