Trend warriors huddle up!
GBP/USD looks ready to extend its weeks-long downtrend ahead of this week’s U.S. data releases!
Will we see a trend extension this week? Or are the bulls gearing up for an upside breakout?
GBP/USD 4-hour Forex Chart by TradingView
I don’t know if you’ve noticed but Cable (GBP/USD) has been making lower highs and lower lows since early March following a rejection from the 1.2900 area.
But weaker-than-expected growth figures from the U.S. and the return of interest rate cut speculations for the Fed have weakened USD against “riskier” bets like GBP.
On the other hand, Bank of England (BOE) members have telegraphed their preference to take a cautious approach to cutting rates.
GBP/USD found support from the 1.2300 and is now trading closer to the 1.2525 zone!
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 U.S. dollar and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Will we see a trend extension this week? Trend playas are in a position to enter at higher prices as GBP/USD hangs out at the 1.2520 zone after a bounce from the 1.2300 psychological handle.
As you can see, GBP/USD’s current levels line up with a broken support zone from February and March. This time, it’s also near the 4-hour chart’s 100 SMA, trend line resistance, and R1 (1.2586) Pivot Point line.
A rejection from the trend line zone could drag GBP/USD back to the 1.2300 previous lows if not new trend lows in the next few days.
But if the pro-risk, anti-USD sentiment persists in reaction to this week’s FOMC statement and U.S. NFP-related reports, then GBP/USD could bust through its trend line resistance.
What do you think? Which way will the pair go as it tests a downtrend resistance?