TECHNICAL ANALYSIS OF THE GBP/USD
Hi GBP/USD traders. Our favorite pair has been experiencing huge price volatility along with the other major pairs since yesterday's FOMC news release. I am not surprised by the erratic movements in the market because I have analyzed the GBP/USD and concluded that it will fall this week as a result of a stronger US dollar. Let me now share my technical analysis of this pair.
Going forward, the 4-hour chart of the GBP/USD currency pair shows that there is still enough opportunity for the pair to drop even lower. I predicted about 100 pips drop from 1.4115 to 1.4000 yesterday, but right now, it looks like the bears have come out with strong momentum and are ready to push this pair another 200 pips lower.
This pair blew past the support zone around 1.4000 and it is currently trading at the 1.3936 price level. I expect this pair to drop to the next major support zone which is between 1.3800 - 1.3850 in the coming days.
The GBP/USD pair has been in a strong uptrend that is supported by a rising trendline. However, this trendline is now being tested and traders should not be surprised to see price break below this support line.
The price action of this pair is already signaling a trend reversal. If this pair can break this support level and the price hits 1.3800, then I will become bearish on this pair. When this happens, traders should wait for a retest of the broken support line, that is, a retracement of the price back to the 1.3900 - 1.4000 levels and then a drop in continuation of the bearish trend.