GBP/USD has been trading sideways for several weeks now, but price action is tapering to point, forming what seems to be a symmetrical-ish triangle pattern in the process. A symmetrical triangle means that bears and bulls are fighting it out, but neither side is clearly winning and a breakout could occur in either direction, so we don’t really have a directional bias. However, stochastic is already indicating oversold conditions and the previous long-term was a downtrend, so the path of least resistance seems to be to the the downside. In any case, the pattern is around 430-pips tall, so breakout move could potentially last for the same amount.
As y’all can see, price is currently milling about near that there ascending channel’s resistance area. In addition, stochastic has already reached overbought territory, price may be coming back down soon. Looking for shorting opportunities in an uptrend and near the channel’s resistance area is pretty risky, though, so conservative forex traders may wanna sit this one out. As usual, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, alright?
The pair recently bounced off that there channel’s support area but encountered a fresh wave of sellers when it reached the price area with significant market interest around the 1.2960 handle (dashed line). And if we apply our Fibonacci tool, we can see that the 1.2960 handle sits right smack on the 50% retracement level, which is probably why the pair reacted and went back down again without touching the channel’s resistance area. And if you’re looking to go short, just keep in mind that stochastic is already signalling oversold conditions, so more buyers may start coming in to push the pair higher while gunning for the channel’s resistance area.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.