GBP/USD – A bearish signal?

Or long term consolidation?

It’s been an interesting day for cable, one that saw the dollar retreat before the pair quickly reversed course which raises many questions.

The reversal came at the 50 fib level which could be viewed as a bearish move. But it isn’t that simple. The pair tested the 61.8 fib a month and a half ago before breaking through the 200/233-day SMA band.

But then it failed to make a new low before breaking back above the moving average band. Hardly the action of a pair that’s taken a very bearish turn.

So I’m not yet getting overly excited about the 50 fib bounce, regardless of how aggressive it seemingly was.

If anything, this looks more like a pair in long term consolidation than one breaking into a major trend higher or lower. Time will tell.

A move below the rising channel – which itself is far from perfect – may be a bearish signal in the near-term, but beyond that many big support levels remain, starting with the September lows around 1.3725.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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