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Can the GBP/USD rally from the current levels?


iwantmoney

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The GBP/USD is a currency pair that is in the news due to the Brexit negotiations. It is likely to be influenced based on the news coming out of the UK and Europe. Hence, it might not follow the technicals perfectly. Traders should reduce their position size while dealing in scrips that are likely to react violently to the news on either side. Now, let's look at the technicals on the chart and try to forecast its next probable move.

The GBP/USD pair is currently attempting to bottom out. It has formed a bullish inverse head and shoulders pattern. After having broken out of the neckline of the pattern, a retest of the breakout level is likely. If the bulls succeed in bouncing off the neckline, the pair is likely to rally towards its medium-term objective of $1.4.

Both the moving averages are turning up and the RSI is in the positive zone. This shows that the bulls have the upper hand in the near term. However, if the bulls fail to defend the neckline, the pair can fall to the 20-day EMA and if this support breaks, the fall can extend to the 50-day SMA. The pattern will be invalidated if the price continues to plunge and sustains below the right shoulder. 

So, the traders should wait for a successful retest of the neckline before initiating long positions. Sometimes, the price doesn't pullback to the neckline if the trend is strong. In such cases, a small consolidation offers a better buying opportunity.

 

 

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