GBPUSD Bears Retain Control Following BOE's Policy Decision
The Monetary Policy Committee (MPC) of the Bank of England expectedly maintained the near-negative Official Bank Rate unchanged at 0.10 per cent. The pound initially surged following the publication of the policy decision, but then the GBPUSD promptly retraced from the initial peak.
The GBPUSD probed the lower boundary of the Distribution Area in the wake of the policy decision but then retraced back. Nevertheless, this uptick was created following an initial dropdown to 1.38600.
The last candle's massive lower tail indicates uncertainty in the market and strong buying pressure just below the 100-day MA (in blue). The price action also appears to be strengthening above the 50-day MA (in green), which serves as a floating support.
The rebound from the ascending trend line indicates that the GBPUSD is not yet ready to resume falling as the bulls retain control in the short term. At the same time, the consolidation below the Distribution Area implies that bullish commitment is not sufficient enough to initiate a new upswing.
The prevailingly neutral market momentum is underpinned by the MACD indicator . Overall, the price action is likely to continue consolidating between the ascending trend line and the Distribution Area in the near future in an increasingly more pronounced bottleneck.
An eventual breakout/breakdown away from the two would elucidate the next likely direction for the market.
The GBPUSD probed the lower boundary of the Distribution Area in the wake of the policy decision but then retraced back. Nevertheless, this uptick was created following an initial dropdown to 1.38600.
The last candle's massive lower tail indicates uncertainty in the market and strong buying pressure just below the 100-day MA (in blue). The price action also appears to be strengthening above the 50-day MA (in green), which serves as a floating support.
The rebound from the ascending trend line indicates that the GBPUSD is not yet ready to resume falling as the bulls retain control in the short term. At the same time, the consolidation below the Distribution Area implies that bullish commitment is not sufficient enough to initiate a new upswing.
The prevailingly neutral market momentum is underpinned by the MACD indicator . Overall, the price action is likely to continue consolidating between the ascending trend line and the Distribution Area in the near future in an increasingly more pronounced bottleneck.
An eventual breakout/breakdown away from the two would elucidate the next likely direction for the market.
The GBPUSD continues to consolidate above the psychologically significant resistance-turned-support level at 1.40000, as bullish commitment in the market peaks. This is confirmed by the MACD indicator.
The breakout above this major threshold occurred after the price action penetrated above the Ascending Wedge pattern, as can be seen on the 4H chart above. At present, the pair appears to be consolidating within the boundaries of a narrow range (Flag).
Given that the pound was not strengthened by the better-than-expected GDP data for Q1, the GBPUSD may finally be due for a minor bearish correction. That is, if the price action does not break out above the Flag and continue advancing further north.
The two Fibonacci retracement levels - the 23.6 per cent at 1.40470 and the 38.2% at 1.39740 - seem like two potential targets for such a correction. Notice that the two are positioned around the psychological support at 1.40000, which increases the likelihood of adverse fluctuations between the two Fibonacci retracements.
Meanwhile, the 20-day MA (in red) represents the first obstacle for bears, as the GBPUSD would have to break it before it can head any lower.