Since March 3, an unprecedented bullish movement has emerged on the GBP/USD daily chart, with the pair accumulating a gain of over 3% during this period. The bullish pressure continues to be driven by uncertainty surrounding the trade war, which has gradually weakened the U.S. dollar, prompting investors to seek refuge in European currencies.
Today, the market is showing a strong neutral candle, partly due to the expectation surrounding the Federal Reserve’s interest rate decision, which will be announced tomorrow, along with the Bank of England’s decision on Thursday. Until the outcomes of both central bank meetings are known, the neutral bias is likely to dominate short-term movements in GBP/USD.
Bullish Channel
Since mid-January, a consistent bullish pressure has developed in the pair, forming a short-term ascending channel. Currently, price movements are testing the upper boundary of this channel. If buying pressure remains strong, the bullish trend could accelerate in the coming sessions, leading to a steeper channel in the short term.
RSI (Relative Strength Index)
However, the RSI presents a different scenario. The upper boundary of the bullish channel coincides with the overbought zone, as the RSI oscillates near 70. Additionally, higher highs in price and lower highs in the RSI indicate a persistent divergence. These two signals suggest that buying momentum may be slowing down, potentially leading to short-term bearish corrections.
MACD (Moving Average Convergence Divergence)
The MACD is showing a similar trend to the RSI. The signal line and MACD line are at levels not seen since August 2024, and a potential crossover could occur in the coming sessions. This indicates that the recent bullish momentum in moving averages is gradually fading, which could create room for selling corrections in the upcoming sessions.
Key Levels to Watch:
By Julian Pineda, CFA – Market Analyst
Today, the market is showing a strong neutral candle, partly due to the expectation surrounding the Federal Reserve’s interest rate decision, which will be announced tomorrow, along with the Bank of England’s decision on Thursday. Until the outcomes of both central bank meetings are known, the neutral bias is likely to dominate short-term movements in GBP/USD.
Bullish Channel
Since mid-January, a consistent bullish pressure has developed in the pair, forming a short-term ascending channel. Currently, price movements are testing the upper boundary of this channel. If buying pressure remains strong, the bullish trend could accelerate in the coming sessions, leading to a steeper channel in the short term.
RSI (Relative Strength Index)
However, the RSI presents a different scenario. The upper boundary of the bullish channel coincides with the overbought zone, as the RSI oscillates near 70. Additionally, higher highs in price and lower highs in the RSI indicate a persistent divergence. These two signals suggest that buying momentum may be slowing down, potentially leading to short-term bearish corrections.
MACD (Moving Average Convergence Divergence)
The MACD is showing a similar trend to the RSI. The signal line and MACD line are at levels not seen since August 2024, and a potential crossover could occur in the coming sessions. This indicates that the recent bullish momentum in moving averages is gradually fading, which could create room for selling corrections in the upcoming sessions.
Key Levels to Watch:
- 1.29721 – Current Resistance: This significant resistance level sits at the upper boundary of the bullish channel and coincides with the 61.8% Fibonacci retracement level. Sustained breakouts above this level could accelerate buying pressure, leading to a stronger bullish move.
- 1.27700 – Near-Term Support: This support zone aligns with the 50% Fibonacci retracement level and could serve as a potential area for short-term bearish corrections.
- 1.26183 – Distant Support: This critical support aligns with the 50- and 100-period moving averages and the lower boundary of the larger bullish channel. A break below this level could jeopardize the current bullish formation, potentially triggering a stronger bearish move.
By Julian Pineda, CFA – Market Analyst
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.