GBP/USD technical analysis: Teasing inverse head-and-shoulders breakout

GBP/USD has created an inverse head-and-shoulders pattern on the 4-hour chart.
A convincing move above 1.2165 would confirm a bearish-to-bullish trend change.

Omkar Godbole FXStreet Contributor

GBP/USD is flirting with the inverse head-and-shoulders neckline resistance of 1.2165 at press time.

An inverse head-and-shoulders is a bullish reversal pattern and its success rate is high when it appears after a notable sell-off.

That seems to be the case here. The pair fell from 1.3381 to 1.2014 in the five months to Aug. 12 before creating the inverse head-and-shoulders pattern.

A convincing break above 1.2165 would confirm a bearish-to-bullish trend change and open the doors to 1.2316 (target as per the measured move method).

4-hour chart

Trend: Bullish above 1.2165

Pivot points

1. R3 1.2332
2. R2 1.2257
3. R1 1.2213
PP 1.2138
1. S1 1.2094
2. S2 1.202
3. S3 1.1976

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.