On the daily chart below for GBPUSD, we can see that after a long struggle at the 1.2444 resistance, price broke out and rallied to the 1.27 handle. A
On the daily chart below for GBPUSD,
we can see that after a long struggle at the 1.2444 resistance, price broke out and rallied to
the 1.27 handle. As we got another hot US NFP report though, the price started
to top out and eventually reversed as more good US data started to come in.
Since the Fed hinted to a pause
at the last FOMC meeting but left the door open for another hike in case the
data remains strong, the market is now pricing in a higher chance of such a scenario.
The GBPUSD price is now falling
below the key 1.2444 resistance and the moving
averages have crossed to the downside signalling that the trend is changing.
Moreover, the divergence with the MACD may hint to an upcoming big
reversal with the 1.1839 support as the ultimate target.
On the 4 hour chart below, we can
see that GBP/USD has now returned back within the range around the 1.2444
resistance. The whole move up since the 1.20 level has diverged with the MACD,
so a break below the bottom of the range should further confirm a big move to
the downside. The problem here is that the price is now diverging into the
bottom of the channel, so we might first get a bigger pullback probably into
the top of the range before an eventual breakout.
On the 1 hour chart below, we can
see that the price action is a bit messy and compressed as we approach the
bottom of the range at 1.2350. This setup looks like a falling
wedge, and it makes it harder to identify clear support and resistance levels.
Nonetheless, we have two swing levels that should be barometers for the next
move.
On the upside, if the price
breaks above the 1.2470, GBP/USD is likely to rally to the 1.2530 resistance.
On the downside, a break below the 1.2410 level should lead to a fall towards
the 1.2350 support. Today, we have the US PMIs. A beat should lead to more USD
strength and easily get us to the 1.2350 support, while a miss should offer a
bigger pullback and take us to the 1.2530 resistance.
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