GBP/USD Price Analysis: Sell-off cutting into Day-3 longs, 1.2050 eyed for days ahead


  • GBP/USD has sold off from a 50% mean reversion of the prior bearish daily impulse. 
  • We are seeing the following through with 1.20 eyed but the price is meeting some support at this juncture.
  • This opens the risk of a correction before the next move to the downside.

GBP/USD rallied in a parabolic fashion on Thursday on the third day of demand for the British Pound. The pair travelled from a low of 1.2056 to a high of 1.2194 before reversing back to test the midpoint of the 1.21 area and recently reaching a sell-off low of 1.2130. 

The US Dollar broke structure on the downside in the late London session and extended the move into the New York open only to reverse. Risk-off kicked in and sent the US bourses packing and cable off a cliff as the following illustrates:

DXY H1 chart

US500 H1 chart

GBP/USD technical analysis

GBP/USD has dropped into the parabolic rally and the length that had been building up into a climax. We had three levels of rise since the day opened in Asia in a massive pump-up that has concluded in a dump in the New York session. this coincided with the cash opening hour on Wall Street, 1730 GMT and at the London fix of 1600 GMT.

We are seeing the followthrough with 1.20 eyed but the price is meeting some support at this juncture:

This opens the risk of a correction before the next move to the downside with the ATR of 117 pips for the day already done within the 137 pip range so far:

A bullish close on the day will be giving us three bullish closes in a row and leaves the risk of another sell-off on Friday:

The price has already corrected to a 50% mean reversion of the prior bearish daily impulse. 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD extends sideways grind near 1.0850 in quiet trading day

EUR/USD extends sideways grind near 1.0850 in quiet trading day

EUR/USD moves sideways at around 1.0850 in the second half of the day. The data from Germany showed that the IFO Business Climate Index edged lower to 89.3 in May but failed to trigger a market reaction. US markets will remain closed on Monday.

EUR/USD News

GBP/USD climbs to new two-month high above 1.2750

GBP/USD climbs to new two-month high above 1.2750

Following a quiet European session, GBP/USD edged higher and touched its strongest level since mid-March above 1.2750. Financial markets in the US are closed on Monday in observance of the Memorial Day holiday, possibly limiting the pair's volatility in the American session.

GBP/USD News

Gold recovers toward $2,360 following Friday's sharp drop

Gold recovers toward $2,360 following Friday's sharp drop

Following the sharp decline seen in the second half of the previous week, Gold stages a decisive rebound toward $2,360 on Monday. In the absence of high-tier data releases, escalating geopolitical tensions seem to be providing a boost to XAU/USD.

Gold News

Ripple holders wait for SEC lawsuit ruling amidst optimism of XRP ETF in 2025

Ripple holders wait for SEC lawsuit ruling amidst optimism of XRP ETF in 2025

Ripple holders are awaiting a ruling in the Securities and Exchange Commission’s (SEC) lawsuit against the payment remittance firm. A court ruling was awaited in May 2024, however there is no update, as of Monday, May 27. 

Read more

Three fundamentals for the week: Traders laser-focused on Fed's favorite inflation figure Premium

Three fundamentals for the week: Traders laser-focused on Fed's favorite inflation figure

US Consumer Confidence kicks off the week with worries of further deterioration. An update on past US GDP growth may also include a downgrade. Core PCE, the Fed's preferred gauge of inflation, is set to trigger high volatility. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures