The GBPUSD pair has been on a downward trajectory, with the price falling from a high of 1.3044 to a recent low of 1.2806. This decline has been contained within a falling price channel visible on the 4-hour chart, suggesting a consistent bearish momentum.
Current Technical Picture
The pair remains confined within this descending channel, which is a key technical feature guiding current price action. As long as GBPUSD stays within this channel, the downward pressure is likely to persist.
Key Levels to Watch
Support Levels:
- 1.2806 (Recent low)
- 1.2780 (Next potential target)
- 1.2710 area (Secondary target)
Resistance Levels:
- Upper boundary of the price channel
- 1.2888 (Key resistance level)
- 1.2940 area (Potential target if upward movement continues)
Potential Scenarios
Bearish Scenario
If GBPUSD continues to respect the confines of the falling price channel, we can expect the downside move to continue. In this case:
- The next target to watch is around 1.2780
- If bearish momentum persists, we could see a further drop towards the 1.2710 area
This scenario assumes that the overall downtrend remains intact and that the upper boundary of the channel continues to act as resistance.
Bullish Scenario
On the flip side, if GBPUSD manages to break above the channel resistance, it could signal a potential reversal. In this case:
- The first key level to watch would be 1.2888
- A break above 1.2888 would suggest that the downside move from 1.3044 has likely completed at 1.2806
- In this case, the next target would be the 1.2940 area
Such a breakout would indicate a significant shift in momentum and could open the door for further gains.
Conclusion
The GBPUSD pair is currently in a clear downtrend, as evidenced by the falling price channel on the 4-hour chart. Traders should pay close attention to whether the price continues to respect this channel or if it manages to break out.
The 1.2888 level appears to be a critical juncture – a move above this level could signal a potential trend reversal, while failure to breach it could reinforce the current bearish trend.
As always, it’s crucial to consider broader economic factors affecting both the UK and US economies, as these can have significant impacts on the GBPUSD pair. Stay informed about economic releases and geopolitical events, and remember to implement proper risk management in your trading strategies.