Between October and January, GBP/USD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a bullish outlook. This upward movement is further validated by the formation of a Golden Cross, a widely recognized technical indicator that signals buying opportunities.
Despite this positive shift, the market faced a temporary disruption over the weekend when newly announced tariffs caused a sharp opening gap of 200 pips on Monday. Nevertheless, this gap was quickly covered, reinforcing the notion that buyers are gaining control. Such price action suggests strong demand and growing confidence in the pair’s upside potential.
However, a notable resistance level has emerged at 1.2530, where a Double Top formation has appeared. This pattern is often associated with short-term profit-taking, leading to a temporary pullback in prices. Given this setup, we anticipate further downside movement before the next leg higher. To optimize risk-to-reward, we prefer entering a long position after a deeper retracement. Our ideal entry point would be near the 38% Fibonacci level, around 1.2390, as this zone could act as a strong support level before the bullish trend resumes.
Despite this positive shift, the market faced a temporary disruption over the weekend when newly announced tariffs caused a sharp opening gap of 200 pips on Monday. Nevertheless, this gap was quickly covered, reinforcing the notion that buyers are gaining control. Such price action suggests strong demand and growing confidence in the pair’s upside potential.
However, a notable resistance level has emerged at 1.2530, where a Double Top formation has appeared. This pattern is often associated with short-term profit-taking, leading to a temporary pullback in prices. Given this setup, we anticipate further downside movement before the next leg higher. To optimize risk-to-reward, we prefer entering a long position after a deeper retracement. Our ideal entry point would be near the 38% Fibonacci level, around 1.2390, as this zone could act as a strong support level before the bullish trend resumes.
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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.