- GBP/USD has rallied off of fresh six-week lows set just last Thursday, and is starting to find resistance at a familiar area around 1.3930.
- While the longer-term bullish trend that defined the pair’s price action in 2017 remains, near-term indications suggest a deeper bearish move may be in the cards before that bigger-picture trend may be ready for resumption.
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GBP/USD Pulls Back While Longer-Term Bullish Trend Remains
The British Pound continues to wrestle between longer-term themes of strength to go along with shorter-term indications of weakness. While GBP/USD spent much of February displaying messy price action, a bit of trend had developed as prices dipped to fresh six-week lows as we neared the end of the month. The support zone that we were following for bullish plays that ran from the prior low of 1.3765 up to the Fibonacci level at 1.3837 was unable to stem the tide of selling, and as prices broke through this zone with no support showing, bullish setups were invalidated.
Support eventually showed-up around 1.3710 as we turned the page into March, after which a spate of strength developed that’s seen prices run-higher along a bullish trend-line.
GBP/USD Hourly Chart: Bullish Trend-Line Shows After Bounce From Six-Week Lows
Chart prepared by James Stanley
Current resistance appears to be emanating from a couple of different places. The more obvious of which is the prior point of swing-support around 1.3930 that had previously helped to set both support and resistance swings.
GBP/USD Four-Hour Chart: Resistance at a Familiar Level
Chart prepared by James Stanley
Going out on the daily chart will show another element of resistance, as sellers appear to be showing-up around the mid-line of the bullish channel that’s been in place since last year. This same mid-line had helped us to set support earlier in February; but as prices dropped below later in the month, we can now see some element of resistance showing here, as well.
GBP/USD Daily Chart: Current Resistance Showing Around Channel Mid-Line
Chart prepared by James Stanley
On the below chart, we’re putting all of the pieces from the above charts together, and notice how the royal blue line coming from that channel mid-line is helping to carve-out short-term resistance. This opens the door for short-side plays in the pair, with the possibility of stops being lodged above either the swing of resistance at 1.3930 for more aggressive stances; or above the psychological level of 1.4000 for more conservative outlays.
GBP/USD Hourly Chart: Channel Mid-Line (in Blue) Helping to Set Short-Term Resistance (in Red)
Chart prepared by James Stanley
To read more:
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--- Written by James Stanley, Strategist for DailyFX.com
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