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28.09.202618:11 विदेशी मुद्रा विश्लेषण और समीक्षा: GBP/USD – Smart Money Analysis: The Pound's Correction

The GBP/USD pair continues its virtually free fall, but over the past few days we have nevertheless seen a corrective pullback, which may end as early as this week, as the price is facing resistance from the new imbalance 30 level from above. Over the past three weeks, the bears have attacked with virtually no resistance from the bulls. I would like to remind you that the rise in the U.S. currency began even before the latest FOMC meeting, at which the market was literally demanding tighter monetary policy. Last week, FOMC officials Thomas Barkin, John Williams, Susan Collins, and others added fuel to the fire by confirming their intention to continue raising the interest rate because of excessively high inflation. The market latched onto the Fed tightening factor and has continued to calmly buy the dollar for three consecutive weeks, as if the Fed had promised another five rounds of tightening. Neither chart patterns nor the economic backdrop can stop the decline at present. Only the bears themselves can stop the bears.

I would also note that, at the same time, traders expect the Bank of England to implement the same two rounds of monetary policy tightening as the Fed. Moreover, I repeat: the dot plot points to just one policy tightening. Thus, the Bank of England may ultimately tighten policy more than the Fed, which clearly cannot contribute to the growth of the U.S. currency.

Despite the unfavorable picture for the British pound that has developed in recent weeks, the dollar has also suffered numerous blows of fate in recent months. If it were not for the Fed's decision to raise the interest rate in September and its readiness to tighten policy at least once more before the end of the year, I would still expect the U.S. currency to decline. I still expect this, but from lower levels. However, the bulls' chances now lie only in taking liquidity from the low of July 28 or June 24. The chart clearly shows that most reversals over the past year occurred precisely after liquidity was taken, so in my view, this is a good opportunity. The bears, meanwhile, have imbalances 29 and 30 at their disposal. Particular attention should be paid to the latter, as it has already essentially been worked out. This means that a new sell signal may form in the coming days.

Do the bears have further prospects? In my view, they are limited, but it should be acknowledged that the dollar remains in a favorable period for itself. The Fed not only decided to raise the rate but also communicated to traders this week that it was ready to continue tightening. I do not believe that a prolonged decline in GBP/USD can be based on this factor alone, but in recent weeks the market has done nothing but price in an 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 reacted to bearish imbalance 27, which caused the price to fall by 320 points. The target of the decline was imbalance 25, and this pattern was both worked out and broken through. New bearish imbalances 29 and 30 were also formed, supporting the bears.

There was no economic news backdrop on Monday, but bullish traders used the quiet news environment to their advantage. However, as I have already said, the imbalance 30 level is providing serious resistance.

The overall news backdrop remains such that, in the long term, I cannot expect anything other than a decline in the U.S. currency. The war between Iran and the United States has not changed my long-term expectations. Geopolitical developments forced 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 itself continues to expect only tightening, which is the main reason for the bears' positive sentiment. In my view, any rise in the dollar is temporary and random in nature. I would also note that GBP/USD has been trading in a range for an entire year already. A range allows traders to expect virtually any movements within its boundaries. Traders have so far been unable to leave the range.

Economic calendar for the United States and the United Kingdom:

• United States – JOLTS Job Openings (14:00 UTC).
• United States – CB Consumer Confidence Index (14:00 UTC).

On September 29, the economic calendar contains two entries. The impact of the economic backdrop on market sentiment on Tuesday will be weak or nonexistent.

GBP/USD forecast and trading tips:

The long-term picture for the pound remains bullish. The bears have controlled the initiative in recent weeks, but overall, the range is visible even on the daily chart. Taking liquidity from the swing low of May 1 triggered the decline; a sell signal formed inside the inverted imbalance 27, followed by another bearish signal within the same pattern. Thus, the pound continues its virtually free fall, which may continue all the way to the June lows, from which liquidity may be taken, followed by a reversal in favor of the pound. In the near term, the price may react to bearish imbalance 30.

*यहां पर लिखा गया बाजार विश्लेषण आपकी जागरूकता बढ़ाने के लिए किया है, लेकिन व्यापार करने के लिए निर्देश देने के लिए नहीं |

Samir Klishi,
Analytical expert of InstaSpot
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