Cable has been cruising lower inside a descending channel, and it looks like another bearish correction is in the works.
Is the trend still our friend?
Check out these potential resistance zones on the 4-hour time frame!
GBP/USD 4-hour Forex Chart Faster with TradingView
Persistent risk-off flows stemming from the ongoing US-Iran war have been propping the safe-haven U.S. dollar higher in the past weeks.
At the same time, relatively strong U.S. data points and rising inflation risks are also fueling expectations of Fed rate hikes soon.
Can Cable still pull off a quick retracement?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
GBP/USD is testing support at the bottom of its descending channel that’s been holding since late January this year.
A bounce could pave the way for a test of the nearby Fib retracement levels, particularly the 38.% Fib that coincides with the pivot point (1.3310)and is near the 1.3300 major psychological resistance.
Look out for a higher pullback that could take GBP/USD back up to its channel top closer to the 61.8% Fib and R1 (1.3400), which could be the line in the sand for a bearish correction.
Consolidation or reversal candlesticks around these resistance zones could point to a continuation of the downtrend, potentially dragging Cable back down to the swing low or the next major psychological floor at 1.3200.
On the other hand, long green candlesticks closing above the channel resistance could mark the start of a major reversal.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Promoted: The Analysis & Strategy are only half the Battle; Your Mindset is the Rest.
Today’s chart art zooms in on GBP/USD’s descending channel. But as any pro will tell you, even the cleanest trend-following setup can fall apart if the trader doesn’t stay disciplined when price starts testing the level.
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Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
