Pound to Dollar Outlook Turns Negative After Key Level Breakdown

By Tomasz Wisniewski|

Published: February 06 2024, 02:56 GMT+0

Pound to Dollar Outlook Turns Negative After Key Level Breakdown


In today’s technical analysis, we delve into the British Pound to American Dollar (GBP/USD) currency pair, witnessing a pivotal shift in market sentiment. Over the past few months, from October through the end of the year, the pair enjoyed a bullish momentum. However, entering the new year, this momentum waned, transitioning into a period of consolidation. This phase of market indecision was characterized by a symmetric triangle formation, delineated by red lines, encapsulating the price movements.

As February dawned, the pair made a valiant attempt to break the upper boundary of this triangle, signaling a potential continuation of its prior bullish trend. This breakout attempt, however, was short-lived. The market quickly retraced its steps, leading to a pronounced bounce off the triangle’s upper boundary. This reversal was not merely a retreat back within the confines of the triangle but a decisive breakdown through the triangle’s lower boundary.

This bearish pivot was further compounded by the breach of a critical horizontal support level at 1.262, highlighted in green. This breach is not trivial; it marks a significant turn in the pair’s mid-term outlook, firmly establishing a bearish sentiment. The implications of this development are clear: as long as GBP/USD remains below this green threshold and the delineated lower boundary of the triangle, the bias leans towards further depreciation.

The bearish narrative now firmly in place, only a resurgence above these key levels – the green horizontal support and the triangle’s lower boundary – could potentially reverse this sentiment. However, given the current market dynamics, such a bullish reversal appears increasingly unlikely.

Source: https://www.axiory.com/analytics/technical-analysis/pound-to-dollar-outlook-turns-negative-after-key-l