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Talking Points:

In our last article, we looked at the British Pound after another wave of selling had hit the currency. But as we had warned, GBP/USD was nearing a pivotal support zone that had held the lows of the pair since October, and once price action broke below the confluent zone of support around 1.2250, bears would likely want to retain a nimble stance as continuation prospects beyond 1.2000 could prove challenging.

On the chart below, we’re focusing-in on price action in Cable since the ‘flash crash’ in early-October.

GBP/USD Technical Analysis: Cable Range Visits Support pre-FOMC, BoE

Chart prepared by James Stanley

For those looking to take a directional stance on the pair, the short-side could continue to present challenges given this long-term zone of support just underneath current price action. The bullish side could be difficult to work with as well, at least until some element of a bullish driver shows up; and given that we’re sitting just ahead of FOMC and then a BoE rate decision tomorrow morning, the potential is certainly there.

For those that do want to look at a bullish stance in Cable, a break back-above that key zone around 1.2250 could make the setup a bit more attractive. Let buyers push prices higher above-resistance first to indicate that bulls may be able to continue driving-forward; at which point seeking out a ‘higher low’ at a prior level of resistance could open the door to top-side setups, with the goal of trading the longer-term range in the pair.

GBP/USD Technical Analysis: Cable Range Visits Support pre-FOMC, BoE

Chart prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

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