Price action setup of the British Pound as GBP/USD and EUR/GBP approach critical pivot points.– TECHNICAL UPDATE
British Pound Price Action Setups: GBP/USD, EUR/GBP Nearing Key Pivot Points
British Pound analyzed against USD and EUR
GBP/USD bearish Head & Shoulder in focus
EUR/GBP facing the 100-day moving average
Observing a Prominent Bearish Pattern: Analyzing GBP/USD
In the latest analysis of the British Pound against the US Dollar (GBP/USD), traders are closely observing a prominent bearish Head & Shoulder pattern. This pattern is currently in focus and has potential implications for the currency’s movement. Should the GBP/USD pair confirm a drop through the crucial pivot point at 1.2592, it would pave the way for an extended downward trajectory, raising concerns about Sterling’s stability. Such a decline has the potential to reveal the closely monitored significant support level at the May low of 1.2308.
Upside Potential: Focusing on 1.2848 and Beyond
Conversely, a shift towards an upward trajectory would direct attention towards the left shoulder inflection point at 1.2848. Should the Pound manage to build on its gains and surpass this level, it could potentially open doors to revisiting the July high of 1.3299, suggesting a bullish momentum.
EUR/GBP: Consolidation and Positive Signals
Shifting focus to the British Pound’s performance against the Euro (EUR/GBP), a distinct narrative emerges. The Pound finds itself in a relatively neutral setting in this scenario, indicating a different market dynamic.
Consolidation Between Key Ranges
Within EUR/GBP, consolidation is evident across two key ranges: the currency pair finds support in the range of 0.8493 – 0.8519 and encounters resistance spanning 0.8652 – 0.8701. This consolidation hints at an equilibrium between buyers and sellers in the market.
Positive RSI Divergence: Fading Downside Momentum
A recent rebound from the support range is accompanied by persistent positive divergence in the Relative Strength Index (RSI). This technical signal suggests waning downside momentum, a potential precursor to trend reversals.
100-day Moving Average in Focus
Currently, attention has shifted to the 100-day Moving Average, a significant technical indicator. Earlier in the year, this moving average acted as a resistance level, contributing to a broader bearish sentiment.
Potential Scenarios: Rejection or Breakthrough
Traders are keenly observing the behavior around this moving average. Another rejection could renew a bearish sentiment, directing attention to the August swing lower. Conversely, a sustained breach could indicate a shift towards a more bullish perspective, with a focus on the resistance zone.
As these technical setups unfold, the coming days are expected to offer valuable insights into the trajectory of the British Pound against both the US Dollar and the Euro.
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