Overview:- GBP/USD is trading at 1.2595 level which is near to resistance level, however earlier bulls did their great job and took the pair from 1.2074 level where most of the people were shouting to short the pair. Pair did so well and made successively higher highs and higher lows on day to day basis and arrived at 1.2611 today in the morning session.
Well the way bulls reacted it was already expected from the bulls that they are going to poke the 1.2600 level but it seems like buying sentiments have been exhausted now and they are trying to take some rest. Fresh buying can be seen now above 1.2650 level which is a strong resistance level on the daily chart In short, we can say that pair has arrived at make or break level, now there are two scenario. 1st will it break the 1.2650 level then the second phase of Bull Run will start and in the scenario 2nd. If today pair moves below 1.2540 then we see fresh selling in the pair, however the chances are very high for scenario 2nd.
Fundamental Analysis:- Brexit concerns kept a lid on any strong follow-through gains for the GBP/USD pair. It is worth recalling that the UK dismissed reports that Prime Minister Boris Johnson was ready to compromise on key sticking points such as fisheries and the level playing field.
Meanwhile, Wednesday’s release of the final UK Services PMI passed largely un-noticed and did little to provide any meaningful impetus to the GBP. The gauge for the services sector was revised higher to 29.0 for May as compared to 27.8 estimated earlier, albeit failed to impress bulls. Later during the early North American session, the US macro data might influence the USD price dynamics and produce some meaningful trading opportunities. Wednesday’s US economic docket highlights the release of ADP report on private-sector employment and ISM Non-Manufacturing PMI.
Technical Analysis:-
From a technical perspective, a triple top pattern has been formed and we will get further clear confirmation once it trades and settles below 1.2540 level on daily closing basis. Overall the pair might now be looking to make a fresh attempt towards clearing the 1.2650 hurdle. A convincing breakthrough the mentioned barrier will negate any near-term bearish bias and set the stage for a move towards reclaiming the 1.2750 round-figure mark.
Today’s closing matter a lot due to too much fundamental news are on the board, let’s wait and watch and initiate your fresh sell position below 1.2540 level. Well pair is facing supply pressure already so chances are very high that we may see selloff today and a valid sustainability below 1.2540 level will open the way towards the 1.2400 and 1.2250 level in near term.
A bearish divergence of RSI on the 4 hourly chart is the recent development and providing us some trend reversal signal and it is also in overbought zone so some correction can’t be ruled out. The gap between signal line and MACD line also shrieked which is also favoring the bears and if we see pair below the 1.2540 level then bearish crossover will also occur on the MACD also.
What next:- The 1.2650 level is immediate resistance level followed by 1.2750 whereas 1.2400 level is strong key support level followed by 1.2250 level.
Trade idea:- Based on chart and studies above we can suggest that sell the pair below 1.2540 level for the target of 1.2400 and 1.2250 with stop loss of 1.2680.
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