Figure 1. GBP/USD Daily chart. The low from July 12th acts as resistance in April 2013.

This is know as a classic level. It is a resistance and probable location for a price reversal. There are not many bars in the retracement north, so with an RSI 7 setting; there is not much for a divergence to establish. All the same the front signal shaded gray is a type 3 regular RSI divergence, said another way, RSI failed to copy price higher, this is a weak divergence and suggested upside momentum was fading. It stands to reason that in the 1hour chart under the red arrow you will find a regular classic bearish RSI divergence. Put simple, a signal for a price reversal, where one is expected. The 1hr chart is next.

Fig 2. The 4HR chart. At the exact high, a -9.5% bearish RSI DIV is seen over 4 candles. The1st derivative of RSI with respect to time is -9.5 / 4 = 2.3. Values greater than 1.0 suggest strong decelerations of price action, however further divergences in the low time frames will help narrow down a more probable price reversal point, provided that price is outside the range (at a day high), and on a technical level where such reversal can be anticipated.

Fig 3. GBPUSD the 1HR chart at the messy test of the daily classic level (purple line). All the other divergences have been labelled and it can be noticed that the current bearish divergence is the first of its kind in the rally from the lows.

Fig 4. The 1Hr chart is zoomed. Here we see a double top of price with the RSI value dropping from 90.5% to 72%. On this chart, the overbought boundary is considered >74%, when prices get overbought (OB), then tend to sell off; but more importantly, when divergences occur and cross the OB level, it increases the probability of a price reversal. What about the 5min chart where the signal completed, was there another divergence to also suggest the right shoulder of the price pattern would hold the resistance level? The 15min chart, then the 5min charts are next.

Fig 5. GBPUSD 15min chart.

Fig 6. GBPUSD 5min on April 12th. The right shoulder of the hourly double top divergence also had a lower time frame double bearish divergence. The second part of that signal is also a double top divergence, however while it is significant with dRSI 5% the 19 bars are a high delta time, so the PD value is not significant. Overall, the pattern is known as a fractal double top divergence and it is found on a daily classic level. The previous chart prints a reverse divergence on the 3rd test of a down trend line

Fig 7. GBP/USD hourly chart up to 10:01 am on April 19th (the 9am candle). You can see that the reversal point in the gray shaded box on April 12th had whats called a perfect double top divergence. RSI drops 16.4% across 14 bars, so the Price Deceleration is greater than 1.0. This is just the first derivative of RSI with respect to time for the purpose of quantifying market velocity. It is based on the premise that the technical indicator RSI is a momentum oscillator, the change of RSI is a reflection of price velocity, therefore contrasting it to the change of time is for all effective purposes acceleration = dV / dT. Did the right shoulder of the double top divergence (DTD) also have a lower time frame signal?

Fig 8.

Fig 9. 5min chart. The GBP/USD sells off 141 points.

Fig 10. GBPUSD. Daily chart.