Summary:
- Data from the United Kingdom disappointed on Monday
- Potential inverse head and shoulders pattern can be spotted on the H4 interval
- The pound is trading almost 0.5% against the dollar
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Open account Try demo Download mobile app Download mobile appGBPUSD trades near the key support zone from a weekly interval. On the W1 interval one could spot a candlestick pattern that often heralds an upward move and it was also the case this time. The demand-side struggles with moving higher. However, as long as the price is above 1.2600, an upward correction remains base case scenario. A test of the latest local low cannot be ruled out either.. One may expect an acceleration of the downward move once the price breaks below the 1.26 handle. . While the British currency keeps being pressured by Brexit turmoil, the data released today provided additional macroeconomic concerns.
Source: xStation5
Taking a look at the lower frame - H4 - one can spot the inverse head and shoulders pattern that is being painted. Of course, the demand signal will appear only when the zone marked with yellow color on the chart below is breached. Nevertheless, the pair is trading within the demand zone from the W1 interval and in case the pattern is validated an upward move towards the early-May high (1.3170 area) may be on the cards Prior to reaching the aforementioned high, buyers may struggle with the resistance level at 1.2870 handle.
Source: xStation5
Moving onto the M30 interval, one can see clearly how the disappointing UK data dented moods on the GBP market. GBPUSD broke below the June 6 low and as long as the exchange rate remains below 1.2670, the short-term downward trend should prevail. There is a room to move as low as to the 1.2600 handle, where the lower limit of the support zone from W1 interval is localized.. However, a break back above the 1.2670 handle could mobilize bulls - in such a scenario buyers may try to push the price towards daily highs.
Source: xStation5
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