GBPUSD
The GBP/USD pair keeps pressuring the neckline of a head and shoulders pattern, in a move that does not bode well for cable’s bulls. A break and close below the neckline on a daily basis puts further pressure on the pair as short-sellers will push it toward the measured move.
The price action in the GBP/USD pair this week was strange, to say the least. The pair declined on overall dollar weakness generated by inflation in the United States that exceeded expectations.
While the EUR/USD or AUD/USD traded with a bid tone, cable failed to find buyers. The EUR/GBP rise did not help either, as the cross broke a bearish trendline and now forms a pennant, suggesting further continuation.
There is one market that likes the weakness in the pound – the stock market. As such, FTSE100 is trading above 7,000 points, a staggering level considering Brexit and all.
The technical picture is pretty straightforward and the only thing that may be counterintuitive is the pattern’s visibility. It is literally impossible to ignore such a pattern, but it does not mean that it will work.
Bears may want to wait for a daily close below the neckline and, ideally, below the support area from where the market bounced twice already. Such a move would be bearish and opens the gates for the measured move, seen at 1.32 and beyond.
