The British pound has been struggling to hold onto gains over recent weeks against the US dollar as any upside rallies have quickly fizzled out in the face of a more uncertain global economic backdrop.
Retail sales and CPI inflation data from the United Kingdom economy and risk-off trading sentiment in broader financial markets are likely to be key focuses for sterling traders this week.
The GBPUSD pair has had a strong correlation with the S&P 500 over recent years and tends to perform poorly when this index is starting to slide. Monday and Tuesday of this week were classic case studies of this dynamics.
With sterling under pressure it is also time to look at the short-term and also the longer-term price trend. Technical analysis shows that the short-term trend is bearish below the 1.3850 level, while the over trend is only bearish below the 1.3770 level, which is the location of the pair’s 200-day moving average.
Should we see the overall trend turn bearish then the GBPUSD pair could slip towards the 1.3670 level, and possibly the former monthly trading low. If the short-term trend turns bullish alongside the current long-term bullish trend then I suspect we could see another challenge towards the 1.4000 level.
According to the ActivTrader Market Sentiment tool some 63 percent of traders now have a bearish bias towards the GBUSD pair. The bearish sentiment skew is mildly bullish as we do usually look to trade in the opposite direction of the retail crowd when looking for sentiment trades.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame the GBPUSD pair has formed a large, inverted head and shoulders pattern, with bulls needing to move the price back towards the 1.4000 level to activate the bullish pattern.
It is also noteworthy that a significant amount of bullish MACD price divergence is present until the 1.4000 level. At some point it is likely that the GBPUSD pair is going to heads towards the 1.4000 level as the MACD divergence reverses.
See real-time quotes provided by our partner.
GBPUSD Medium-term Technical Analysis
According to the daily time frame a much larger inverted head and shoulders has been forming in the background, with the price needing to reach the 1.4400 level to officially confirm the structure of the pattern.
The pattern would be extremely large if it forms, as it can be formed from the 2018 high to the 2020 trading low. This would mean that the pattern holds nearly 3,000 points of upside potential.
See real-time quotes provided by our partner.
A comprehensive website for traders, both experienced and new! Checkout our content and learn how to invest and speculate in the markets using margin traded products. Our team of educators has extensive experience and is here to help. Enjoy!
© 2020 YouTrading UK - Leaders in Trader Training.
Cookie | Duration | Description |
---|---|---|
__cfduid | 1 month | The cookie is used by cdn services like CloudFare to identify individual clients behind a shared IP address and apply security settings on a per-client basis. It does not correspond to any user ID in the web application and does not store any personally identifiable information. |
_wpfuuid | 11 years | This cookie is used by the WPForms WordPress plugin. The cookie is used to allows the paid version of the plugin to connect entries by the same user and is used for some additional features like the Form Abandonment addon. |
cf_use_ob | This cookie is set by the provider Cloudflare content delivery network. This cookie is used for determining whether it should continue serving "Always Online" until the cookie expires. | |
cookielawinfo-checbox-analytics | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". |
cookielawinfo-checbox-functional | 11 months | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checbox-others | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. |
cookielawinfo-checkbox-advertisement | 1 year | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". |
cookielawinfo-checkbox-necessary | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". |
cookielawinfo-checkbox-performance | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". |
viewed_cookie_policy | 11 months | The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
YSC | session | This cookies is set by Youtube and is used to track the views of embedded videos. |
Cookie | Duration | Description |
---|---|---|
_ga | 2 years | This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors. |
_gid | 1 day | This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. |
Cookie | Duration | Description |
---|---|---|
_fbp | 3 months | This cookie is set by Facebook to deliver advertisement when they are on Facebook or a digital platform powered by Facebook advertising after visiting this website. |
fr | 3 months | The cookie is set by Facebook to show relevant advertisments to the users and measure and improve the advertisements. The cookie also tracks the behavior of the user across the web on sites that have Facebook pixel or Facebook social plugin. |
IDE | 1 year 24 days | Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile. |
test_cookie | 15 minutes | This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies. |
VISITOR_INFO1_LIVE | 5 months 27 days | This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website. |
Cookie | Duration | Description |
---|---|---|
_gat_UA-42160853-2 | 1 minute | No description |
cf_ob_info | No description | |
CONSENT | 16 years 8 months 3 days 6 hours 2 minutes | No description |