- GBP/USD is trading over 1% higher as the global risk sentiment turns positive.
- There is a confluence zone at 1.25 that the bulls need to watch out for.
GBP/USD 4-hour chart
GBP/USD has retraced heavily on Monday and moved around 1% higher. There is a certain amount of USD bearishness but there is some added GBP strength as EUR/GBP is also 0.25% lower on the session. Only the antipodeans are outperforming GBP in the major FX pairs at the beginning of the week.
Looking closer at the technicals, the resistance zone at 1.25 looks very strong. The purple resistance zone has been tested on multiple occasions making it have more gravitas. There is also the 55 Exponential Moving Average very close to the zone and often the price will try and spike through often closing under the level.
The Elliott Wave and Dow Theory analysts will also be looking at the aforementioned resistance as the level could be the wave 1-2 low. If this is the potential wave 3 lower then the Elliott Wave guidelines state that the wave 1-2 resistance must not be broken.
At the moment the trend is starting to look like a downtrend and the major support is at 1.2335 and then beyond that the red support level at 1.2270. Where we can say the trend has changed back to the upside is the break and close above 1.25 and then 1.2650.
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Additional levels
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