GBP/USD Tests Possible Resistance

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In November, we talked about BoE forecasts getting revised (and also the possibility of more interest rate cuts) and being a reason for possible GBP/USD strength:

“…the BoE effectively signaled to the market that the bank now has a neutral bias in terms of interest rates, while also revising their growth forecasts for the coming two years to the upside.”

Afterwards, we saw the Cable go up through the first previous level of weekly support turned resistance from all the way back in 2009, and has now come to the next major level marked on our charts.

GBP/USD daily

GBP/USD daily

The level was the first swing low after the initial surge of Brexit momentum ran out of steam.

Being still front of mind for traders, we should see some sort of reaction as price heads into the level this week.

GBP/USD hourly

GBP/USD hourly

As you can see zooming into the hourly chart, GBP/USD closed about 70 pips from the level on Friday night.

The ‘middle x’ I’ve marked is also quite a significant zone because of the single indecision candle right near the level. That is the sort of area that you expect some sort of reaction out of when price heads back to it and when combined with a higher time frame level like this, it will be hugely significant.

This is a guest post originally appeared on Vantage FX. Reposted with permission.

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