GBPUSD surging after rejecting the bullish trend line support
Dwayne Buzzell | Oct 11, 2018 10:35AM ET
There has been a sharp fall in the GBPUSD pair after it hit the critical resistance level at 1.43708. Majority of the long-term trend traders made a decent profit by shorting the cable with the formation of the bearish engulfing pattern in the weekly chart. However, the pair found some strong support at 1.26685(bullish trend line support) and formed a nice bullish doji. Currently, the bulls are trying to push this pair higher in the global market but in order to execute fresh long orders, we need a daily closing of the price above the major resistance level at 1.33575.
GBPUSD technical chart analysis
Figure: GBPUSD bouncing off from the weekly bullish trend line
From the above figure, you can clearly see the bulls are trying to take control of this market. However, the weekly bearish pin bar strong suggests another retest of the bullish trend line support. The short-term traders are still shorting the pair at higher prices with a stop loss just above the high of the weekly pin bar at 1.33179. If the bears manage to take control of this market, the price will eventually fall towards the trend line support level at 1.27669. This level is very crucial for long-term investors and any bullish price action confirmation signal will be an excellent opportunity to execute long orders. The first bullish target for this pair is the 38.2 % Fibonacci retracement level at 1.34065. This level is going to provide significant resistance to this pair but a weekly closing of the price above the 38.2% Fibonacci retracement level will ultimately lead this pair towards the 50% retracement level.
If the pair retests the next major resistance level at 1.38985 we might see some ranging market. A clear break of that resistance level will eventually lead this pair towards the 61.8% bearish retracement level. Majority of the professional price action traders in the Forex trading industry is going to observe this level cautiously. Any bearish price action signal will be an excellent opportunity to execute fresh short orders. On the contrary, a clear break of the price above the 61.8% retracement level will confirm the end of bearish retracement for the GBPUSD pair.
On the downside, the first initial support for the GBPUSD pair lies at 1.29145. This level is going to provide temporary support which ideal for scalping. A clear break of this level will target the bullish trend line support. Before we break below the major trend line support, we might see some few retests of the trend line. A weekly closing of the price below the trend line support at 1.27669 will result in a sharp fall. This will also indicate the long-term bearish trend is still in place. Though shorting the pair with bearish of the trend line support seems aggressive strategy but by using the price action signal the risk factors can be greatly reduced. The final target for the bears would the low of 2nd October 2016.
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Fundamental factors
The recent economic performance of the British economy is comparatively well and the cable seems to be ready to recover its Brexit loss. However, the ongoing uncertainty regarding the FED next rate hike is created messy conditions most of the major pairs. If FED officials come up with a hawkish statement and hike their interest rate in the next FOMC meeting, the cable is most likely to fall significantly. However, any mixed or dovish statement from FED chairperson Jerome Powell will fuel up the cable bulls. Considering the fundamental factors, the overall market movement for the GBPUSD pair is still very uncertain. However, the technical traders might look for buying opportunity as long as the weekly trend line support holds.
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