According to last week’s GBP COT Report, we can notice that it continues to add even more long contract positions, which can be an indicator that the GBP is ready to move towards its equilibrium values. On the other hand, the USD weakness is still a fact and the question when it can recover, remains open. We can see that Gold’s COT had some short contract size increase last week and this could be an indicator for a short-term positive change in favor of the USD. This can lead to some corrections.
Now the GBP/USD price is right at the upper monthly trendline, where we see rejection coming into play. Personally, I think that there is one possible scenario:
1. Price will fall towards the daily critical near 1.27500 where it aligns perfectly with the daily orange trendline and the 0.618 Fibonacci level. This shows us that the area has high demand pressure, which can push the price once again towards the monthly upper trendline near 1.30000. Then that it will break it and re-test it. After we see a failed attempt to break below it, we can be sure that the next target will be the 1.40000 mark.
Strong rejections or trend reversal near the buy zones on the smaller timeframes will be good indicators that the following scenario will happen.
Happy Trading!
Now the GBP/USD price is right at the upper monthly trendline, where we see rejection coming into play. Personally, I think that there is one possible scenario:
1. Price will fall towards the daily critical near 1.27500 where it aligns perfectly with the daily orange trendline and the 0.618 Fibonacci level. This shows us that the area has high demand pressure, which can push the price once again towards the monthly upper trendline near 1.30000. Then that it will break it and re-test it. After we see a failed attempt to break below it, we can be sure that the next target will be the 1.40000 mark.
Strong rejections or trend reversal near the buy zones on the smaller timeframes will be good indicators that the following scenario will happen.
Happy Trading!