GBP/USD at a Critical Support Level: What comes next?

9시간 전

The GBP/USD pair has fallen more than 7% since September 26, 2024, largely in response to the strengthening of the USD following Donald Trump's recent victory in the US presidential election. However, it appears that GBP/USD has found significant support on the daily chart, forming a double bottom pattern in the 1.2500 region. This level has been an important reference point throughout 2023 and is poised to act as support once again.

Confluence of Factors
Several elements suggest a potential upward movement in GBP/USD:

1. 7% Decline Without Significant Retracement: The pair has seen a substantial decline since September without any meaningful pullbacks.
   
   
2. Key Support Region: The price has touched an important support level on the daily chart.
   
   
3. Double Bottom Formation: The emergence of a double bottom pattern on the daily chart adds further support to the bullish hypothesis.
   

Considering these points, a long setup could be contemplated if the candle on the daily chart for December 23 closes above the high of the preceding candle. This would create a bullish Engulfing Pattern, which is often viewed as an ignition signal and a buying opportunity.

Potential Targets for a Long Trade

• 1.2800: This target is a previous resistance point that previously hindered further price increases. It also represents a round number, offering approximately 180 pips from the entry point.
  
  
• 1.3000: Another significant resistance level and round number, approximately 380 pips from the entry point.
  

Stop Loss
A suitable stop loss could be placed slightly below support on the daily chart at around 1.2470, providing a distance of approximately 150 pips from the entry point.

Alternative Scenario
Should GBP/USD break below the support level on the daily chart, the next downward movement could see it fall to the 1.2330 level, where it may find another area of support.

Impact of Economic Data: UK GDP and US Consumer Confidence
The upcoming release of UK GDP data should be closely monitored, as it is a critical indicator of the health of the UK economy. If the reading comes in lower than expected, the market may speculate that the Bank of England (BoE) could be forced to cut interest rates to stimulate growth, potentially leading to a depreciation of the Pound.

Meanwhile, US Consumer Confidence data is likely to affect market volatility as household consumption accounts for approximately two-thirds of GDP. A reading that exceeds expectations could indicate strong consumer confidence in the economic outlook, which might lead to inflationary pressures and prompt the Federal Reserve (Fed) to consider raising interest rates, thereby strengthening the USD.

As the GBP/USD pair approaches a crucial support level, the technical indicators suggest a potential for upward movement. However, traders should remain vigilant of the upcoming economic data releases and consider how they might influence market dynamics. Combining technical analysis with fundamental insights will enhance the likelihood of making well-informed trading decisions during this pivotal moment.

Disclaimer
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