Pound Outlook: GBP/USD Finally On the Move
Pound Technical Highlights:
- GBP/USD’s tight price action should give-way to a move soon
- There are a couple of key levels/lines/pattern to watch
GBP/USD’s tight price action should give-way to a move soon
GBP/USD has been on a planet of its own in recent trade doing nothing notable as other currencies made big moves in the past week. Even the Euro, which was long overdue for volatility, finally woke up prior to GBP coming out of its slumber. The participation on Friday should set up the next week with more volatile price action.
The choppy downward price behavior is initially resolving lower into support around the 12770/12693-area. This zone is created by price support back to May and the 200-day MA. Friday’s sell-off may turn out to be a false move, as often times is the case with cable after coming out of a congestion area.
But for now, though, I will respect the break. However, should we see it turn higher off noted support back over the 13000-line, then a broader rally could very well begin to evolve. Longer-term, GBP/USD appears to be putting in a bottoming formation.
Since December of 2018 the price sequence is taking on the shape of a bottoming inverse head-and-shoulders pattern, but it is a bit premature to discuss beyond a sentence or two. If a rally does begin to grow legs above 13000, we can start to discuss a run to the neckline situated up near 13600, and possibly beyond.
GBP/USD Daily Chart (initial break lower)
GBP/USD Weekly Chart (Bottoming pattern could be developing)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.