The GBP/USD is potentially at critical crossroads as it is trading just below the neckline of an inverse head-and-shoulders pattern. Yesterday’s lesser-than-anticipated US CPI figures gave cable the needed boost to test this important threshold.
If a breakout occurs, and we see the price cross above 12295, it could get underway as the pattern has been developing for two months. The depth of the pattern suggests that we can see the pair trading as high as the Sep ’20 swing-low at 12669.
Resistance is resistance until a breakout occurs, and we do need to see a daily close above noted resistance first before the pattern is valid. Failure to do so can set it moving towards a decline. Often times these patterns are noted at this stage or earlier and then when the price turns down.
The first level to watch on a breakout is 12405, followed by the September 2020 swing low at 12669. Price could stall ahead of these levels, but these are currently the only visible horizontal price levels to watch at this juncture.
If we see price fail to climb firmly above the neckline, watch for a developing trend-line off the lows to keep cable bid. If it fails to do so, the first price level to watch clocks in at 120029, followed by the low at 11764.
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This page was final edited on 5 November 2024, at 05:03 (UTC).
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