Cable is flirting with a key support zone that could open the door to a longer-term reversal in GBP/USD if it gives way.
What’s up with that?!
The daily chart might give us more clues:
GBP/USD Daily Forex Chart by TradingView
The British pound took a backseat to the other majors last week, with traders leaning into global trade deal optimism and brushing off growth worries.
At the same time, the U.S. dollar ended up the weakest of the bunch as questions around the Fed’s independence swirled, and safe havens got dumped in favor of risk-on plays.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the British poundand the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
GBP/USD had been grinding higher since mid-year, but that run hit a wall at 1.3700, and now the pair’s hanging out closer to the 1.3400 psychological level.
That zone has held its ground since April, acting as a ceiling and a floor for price action. This time around, it lines up with the “neckline” of what looks like a possible Head and Shoulders reversal pattern.
Is GBP/USD gearing up for a bearish reversal?
Keep an eye on whether it stays below the 1.3400 neckline. If it does, we could see a slide toward 1.3200 near the S2 Pivot Point, maybe even a test of the big 1.3000 handle.
But if buyers step in and we see a solid bounce off support, GBP/USD might retest the 1.3500 previous area of interest or make another run at the 1.3700 previous highs.
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.
Disclaimer:
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.
