GBP/USD Technical Analysis: Turn-Around After 1.3000 Test

Multiple pound notes £5, £20 and £50 Pound Sterling
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By :  ,  Sr. Strategist

GBP/USD Talking Points:

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I’m a big fan of weekly bars as they help me to get a greater view of the big picture. And for the past couple of weeks, that picture was struggle in GBP/USD as the pair had previously vaulted to a fresh two-year-high on the back of USD-weakness.

I looked into this in the Tuesday webinar and as I said then, I was expecting a big test around the 1.3000 level. Gauging buyer behavior at that point seemed like a big deal to me at the time and as we saw on Wednesday, bulls stepped in just two pips shy of the big figure, leading to a strong topside rally. The 1.3000-1.3058 zone that I had referenced as possible resistance was chewed through by buyers yesterday and that push has continued so far on Friday.

 

GBP/USD Daily Price Chart

gbpusd daily 91324Chart prepared by James Stanley, GBP/USD on Tradingview

 

At this point there’s a bit of time until the weekly bar completes but GBP/USD has the potential to finish the week with a hammer formation, often approached with aim of a bullish turn following an intra-bar reversal theme.

The 1.3000 price is key as this was resistance in July before a pullback drew price down for a trendline support test. So there’s a case of support at prior resistance at that big figure, along with what’s been a strong early response to that level.

The key here will be continued weakness in the US Dollar as we move into next week’s FOMC rate decision and I’m of the same mind as I was on Tuesday, where GBP/USD can remain as one of the more attractive venues for continued USD-weakness.

 

GBP/USD Weekly Price Chart

gbpusd weekly 91324Chart prepared by James Stanley, GBP/USD on Tradingview

 

--- written by James Stanley, Senior Strategist

 

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