FX.co ★ Jackroay | GBP/USD

I see that the pound isn’t showing a decisive decline yet, and I note that it’s moving slowly while being constantly held back, which tells me the upward wave structure is still technically building. I observe that the MACD is in the upper buy zone, but I also notice it has already fallen below its signal line, which I interpret as an early warning of weakening bullish momentum. I can construct a large downward channel starting from the recent top, and I recognize that this is where the decline originally began. I remember that before the New Year there was prolonged pressure near the highs, and I recall how the price eventually crashed down and tried to break through that channel. I see that a bearish divergence formed on both the MACD and CCI at the edge of the rally, and I believe that relying on the top of the channel increased the odds of that sell signal working, which it did. I feel that conditions are tight and compressed here, especially since at the start of the year the price was prevented from falling below the 1.3427 support level. I watched several attempts to break that level fail before the price was pushed above it to drain liquidity, and I later saw how the subsequent break looked blurred and unclear, with price moving around the level as if it barely existed. I also note that another daily level at 1.3355 recently acted as support and produced a rebound. I still believe the broader decline will continue, especially since other major currency pairs point in that direction. I see potential for a stronger US dollar, and I observe that the Australian and New Zealand dollars are trending lower, with the Aussie forming a rising wedge, which I recognize as a bearish pattern. I also note that the Canadian dollar and Japanese yen show a greater tendency to rise, and I see that the euro is in a downward cycle, even if it doesn’t always move in sync with the pound. I observe that EURGBP has been pushing down since November, which I think supports a decline in EURUSD and slows the fall in GBPUSD. I therefore expect a gradual decline toward the 1.3243–1.3181 zone, which I identify as the upward reversal area from late November.

I also acknowledge that the British pound is currently rising against the US dollar, and I know this fact must be respected. I see on the four-hour chart that an uptrend may be starting, and I admit that, in the current trading situation, longing is technically advantageous. I have highlighted buy signals, and I note that the OsMA histogram has exited the negative zone, crossed above zero, and entered positive territory, while the DeM oscillator is turning north, which I read as supportive of a push higher. I think the odds favor a move through 1.3559, and I remind myself to always act according to my trading plan and move profitable positions to breakeven in time. I identify my bearish trigger level at 1.33875, and I tell myself that if bulls fail to push toward 1.34574 and price breaks and consolidates below my bearish level, I will turn short. I expect that scenario to open the way toward supports at 1.33290–1.33215 and possibly extend toward 1.32956 and 1.32786–1.32742. I question whether I should rely strictly on my working benchmarks, especially knowing that unexpected political or macro shocks could cause serious trouble. I admit that the H1 chart shows how this pair has outsmarted me today, and I recognize that I didn’t buy at the lows when my benchmark was tested. I note that the pair didn’t hold 1.34, that I locked in a buy at 1.3402, and that price went higher. I remember hesitating to sell at 1.3431, waiting for the next level, only to see price stall at 1.3433. I see that Monday closed with a bullish candlestick and that price is now near 1.3417. I recognize hourly buying targets at 1.3455, 1.3527, and 1.3640, and I believe the first target is the most likely. I plan to watch 1.3455 closely for a potential reversal, and I will look for a break of 1.3338 and then 1.3311 if the decline resumes.