- GBP/USD at a cross road, with monthly supply territories problematic for the bulls.
- Bears will be keen to see a break of daily support, and there are two scenarios for how that might play out.
GBP/USD is a tricky pair at the best of times, renowned for higher volatility in the forex space.
The 4-hour ATR is now at the highest level since 23rd November as we move into the crucial make-or-break talks between EU/UK Brexit negotiators, and the clock is ticking.
The price action has been in the hands of the bulls for the most part, with cable climbing from weekly lows in the 1.27 area and en-route towards a new swing high, but stalling short in monthly supply territory, so far.
The bulls have marked a recovery high of 1.3442 this week, but the price has stalled and is pressured, currently down 0.37% on the day.
So, with price at weekly resistance and below 1.3514 monthly highs, where next?
The following is a top-down analysis that illustrates where the next opportunities could arise, either to the upside, on a break of the monthly resistance, or to the downside on a break below daily support.
Monthly chart
-637425390049072850.png)
The price action on the monthly chart shows that the bullish impulse was rejected at old resistance.
The price subsequently made a 61.8% Fibonacci retracement and then moved back to test the highs, supported in the 50% and 38.2% regions.
A bullish scenario can only exist on a break of the monthly supply zone.
Weekly chart
-637425390514274589.png)
The weekly chart shows that the late August wick triggered a monumental sell-off.
Therefore, this is likely to be a strong area of resistance.
There is not long to go until the close of this week, and a bearish close, (red candle, currently green), could be the makings of a downside shift.
The following offers two scenarios for the downside:
Daily charts
-637425390945559561.png)
The first scenario relies on the daily wick being filled on the lower time frames and a break of current support.
The second scenario relies on support holding, for the time being, and the formation of a right-hand shoulder of what could be the makings of a bearish head and shoulders top.
Both scenarios would equate to a downside opportunity from which swing traders can administer from a lower time frame, such as the 4-hour chart, for optimal positioning.
This would be according to market structure and price action.
-637425391329342798.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds below 1.0750 ahead of key US data
EUR/USD trades in a tight range below 1.0750 in the European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays firm above 156.00 after BoJ Governor Ueda's comments
USD/JPY stays firm above 156.00 after surging above this level on the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.