After bottoming at a fresh multi-year low of 1.2381, the GBP/USD pair began an upward corrective movement that sees it new struggling with the 1.2500 figure. Sterling weakness is a result of mounting speculation about a hard-Brexit, while the pair’s bounce has more to do with broad dollar’s weakness.
The Technical Confluences Indicator shows that GBP/USD pair is trading at a tough resistance area, with an even stronger one at around 1.2505, where it has its 10 DMA, and June’s monthly low. If bulls can clear the level, the pair can extend its gains up to the 1.2540 price zone, although the path toward this last is fulfilled with technical studies that will make the run tough.
Looking down, bears would likely have more chances if the pair loses the 1.2470 level, with scope then to fall toward the 1.2420/30 region, where it has multiple moving averages from different time frames. Given the ongoing dollar’s weakness, a break below this last seems unlikely, although when looking at the tech study, there’s nothing in the way from there toward the mentioned multi-year low at 1.2381.
The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.
This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. This means that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas.
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