GBP/USD Technical Analysis – Trendline Breached | Forexlive
On the daily chart below, we can
see that the breakout of the neckline at 1.1839 failed as the news flow started
to come against the USD. First the miss in Jobless
Claims, then the higher than expected unemployment rate and lower than
expected wage gains in the NFP
report, and finally the failure of the Silicon
Valley Bank.
All these events impacted heavily
the bond market with treasury yields falling off a cliff. The market repriced
the terminal rate lower and even rate cuts by the end of the year were added to
the equation. All of this in less than a week.
The US Dollar depreciated a lot
due to this fast unwinding in hawkish bets and the other currencies benefited. The
moving
averages crossed to the upside which is a bad sign for the sellers.
On the 4 hour chart below, we can
see that the trendline was breached and the buyers
jumped in pushing the price to the resistance at 1.2143. The last line of
defence for the sellers will be the resistance at 1.2265. Today we have the US CPI report and it’s likely that we will see
a USD comeback in case data beats expectations, while a miss may add fuel to
the greenback depreciation.
On the 1 hour chart below, we can
see that there’s a divergence between the price and the MACD right at the 1.2143 resistance.
This is a sign that the buying momentum is fading and we may see a pullback
soon. The price may fall back to the 38.2% Fibonacci
retracement level in a long covering move before the CPI
report.
The buyers should step in there
and if the CPI misses, they may pile in strongly. The sellers will need a break
below that level to gain some conviction but ultimately, they will need a beat
in the data to support the selling momentum.