GBP/USD diamond top in progress?
GBP/USD is forming a diamond top, which consists of a broadening formation, followed by a symmetrical triangle. This is a rare pattern which is typically seen as a sign of a possible impending reversal. Coming at a key resistance trend line (dating back to August), there is certainly the possibility that we could see it reverse lower.
However, we have not seen a break in either direction and thus I would need to see confirmation of a move before giving a directional bias. As such, a move through the top trend line, closing above $1.5508 would bring expectations of a break higher with resistance at $1.5529, $1.5552 and $1.564 in view.
Alternately, a close below the lower trend line and the $1.5431 support level would point towards the possibility that we have seen a top with $1.539 the first major support level in view.