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The GBP/USD pair has lost its bullish momentum and currently has one final chance to restore it. The price reacted to bearish imbalance 27, which allowed traders to open short positions. This week, the pound declined to imbalance 25, which is a bullish pattern, and reacted to it. At least, this was the situation at the time of writing. Thus, bullish traders have an opportunity to launch a counterattack, and how strong it will be depends entirely on the bulls themselves. Above, the pound now has a strong resistance zone in the form of bearish imbalance 29. It will certainly not be easy to invalidate it quickly. In the most favorable scenario, the price will react to this pattern as well, but the decline will be limited, after which the bulls will regain control. I do not consider a further decline in the British pound to be logical under the current circumstances, as the dollar has no advantages other than the hawkish stance of the FOMC. In my view, a reversal toward 1.3700 and above is a more likely development.
Despite the unfavorable picture for the British pound that has developed in recent weeks, the dollar has also faced numerous setbacks in recent months. If not for the Federal Reserve's decision to raise the interest rate in September and its readiness to tighten policy at least one more time before the end of the year, I would still expect the U.S. currency to decline. I still expect this, but from lower levels. Imbalance 25 plays the same role for the pound as imbalance 19 does for the euro — the role of a last line of support. If both European currencies consolidate below these patterns, nothing will be able to stop the bears. For now, there are still opportunities for the uptrend to resume, supported by the annual ranges and bullish support zones.
Do the bears have further prospects? In my view, there are few, but it should be acknowledged that the dollar has entered a favorable period. The Fed not only decided to raise the interest rate but also signaled to traders its readiness to continue tightening policy. I do not believe that a prolonged decline in GBP/USD can be driven by this factor alone; however, in recent weeks, the market has been almost entirely pricing in the FOMC rate hike. What could prevent it from buying the dollar for several more weeks amid the Fed's monetary policy tightening?
Chart analysis shows that the picture became completely bearish after liquidity was taken from the May highs. The pound also reacted to bearish imbalance 27, which triggered a new decline in prices. The decline was aimed at imbalance 25, and this pattern was reached. A new bearish imbalance 29 was also formed, and the bears may subsequently receive another opportunity to open short positions. However, at present, the price has reacted to a bullish pattern, which means that an upward move should be expected.
There was no economic news on Tuesday. Nevertheless, the pound continues to make attempts to show at least some growth, which provides optimism for the bulls. However, the bulls now need to invalidate imbalance 29 and thereby break the bearish momentum. This will be quite difficult, but not impossible.
The overall fundamental backdrop remains such that, in the long term, I cannot expect anything other than a decline in the U.S. dollar. The war between Iran and the United States has not changed my long-term expectations. Geopolitical developments prompted the market to remember the dollar's safe-haven status for several months, but the conflict has already passed its most active phase. The future of FOMC monetary policy remains uncertain, while the market continues to anticipate only further tightening, which is the main reason for the bears' positive sentiment. In my view, any appreciation of the dollar is temporary and driven by short-term factors. I would also note that GBP/USD has been trading within a range for an entire year. A range allows traders to expect virtually any movement within its boundaries. For now, traders have been unable to break out of the range.
News Calendar for the United States and the United Kingdom:
The September 23 economic calendar contains four entries, of which I would highlight the UK PMIs. The economic backdrop may influence market sentiment on Wednesday, but the impact is unlikely to be significant.
GBP/USD Forecast and Trading Tips:
The long-term outlook for the pound remains bullish. In recent weeks, the bears have taken control of the initiative. The liquidity sweep from the May 1 swing allowed the decline to begin; a sell signal formed within bearish imbalance 27, followed by another bearish signal within the same pattern. However, the price reaction to imbalance 25 prompted traders to close their short positions, and bullish traders may now take the initiative. The upward target for the pound is the 1.3404–1.3463 level, where a new sell signal may form. However, in my view, the fundamental backdrop is currently not sufficiently favorable for the dollar for the decline in the pair to continue below imbalance 25.
*এখানে পোস্ট করা মার্কেট বিশ্লেষণ আপনার সচেতনতা বৃদ্ধির জন্য প্রদান করা হয়, ট্রেড করার নির্দেশনা প্রদানের জন্য প্রদান করা হয় না।
ইন্সটাফরেক্স বিশ্লেষণমূলক পর্যালোচনাগুলো আপনাকে মার্কেট প্রবণতা সম্পর্কে পুরোপুরি সচেতন করবে! ইন্সটাফরেক্সের একজন গ্রাহক হওয়ায়, দক্ষ ট্রেডিং এর জন্য আপনাকে অনেক সেবা বিনামূল্যে প্রদান করা হয়।
