Commentary in this analysis is aimed at providing a GBP/USD forecast. Numbers indicated on the 1hr tf of the GBPUSD is given below:
(1) The meandering price action of the GBPUSD from May 29, 2018 till present date is captured in this analysis using a falling wedge (diagonal) with price action successfully testing the support and resistance line at least twice; hence validating the chart pattern. This pattern is ideally bullish, signals a possible end to bearish action, and resumption of a bullish trend.
(2) 1.31041 and 1.30687 is used in this analysis as the support region anticipated for the GBPUSD should a break occur below the latest bullish trendline (in pink color). Successful test of this region is expected to provide value for long (buy) positions, while a break below 1.30687 (lower region of support) could see price return to test the lower region of the falling wedge.
(3) A bearish divergence is shown with red lines on the relative strength index and price action. This is a warning signal and implies that the current bullish momentum is running out of time. Also of worthy note is the pink line (bullish trendline) and the red line placed on price. These two lines themselves form a rising wedge that should be watched closely.
The rising wedge (ideally bearish) is also one of the reasons why a break below the pink bullish trendline can trigger a quick sell off.
A break out above the upper line (resistance) of the falling wedge that is confirmed by momentum should see the GBPUSD continue its current bullish trend. 1.33024 is indicated in this analysis as the price level to watch for a possible entry in a long (buy) position. This is considered very conservative, while less conservative approaches involve finding an entry point(s) before price exits the falling wedge.
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