Market Analysis for GBPUSD

27 sept

We are currently trading within three distinct bullish channels:

Macro Channel: This long-term bullish channel has been in play since October 2022, reflecting a sustained upward trend.

Medium-Term Bullish Ascending Wedge: Originating from the $1.26 support level established on August 8th, this wedge pattern has been guiding price action. It is crucial to monitor this structure as it often signals a potential breakout or breakdown.

Micro Channel: This smaller channel is derived from the lower support of the ascending wedge and has been forming as price action continues to respect its boundaries.

Recent Price Action
On Tuesday, September 24th at 7:00 PM EST, the price reached $1.343, a key resistance level. This level not only reaffirmed the integrity of the micro channel and the medium-term ascending wedge but also aligns with a significant daily support/resistance level. Additionally, it sits within the golden pocket of a Fibonacci extension drawn from the $1.26 low of the wedge.

Following this rejection, the price declined to establish a minor low at $1.331 on the following day at 5:00 PM. This level is pivotal as it represents the potential support needed to maintain the bullish structure of the micro channel. A successful retest of this level could sustain the bullish narrative, while a breach would signal a breakdown.

Currently, the price is exhibiting soft highs and lows, with a recent low around $1.336. The consolidation and the lack of strong buying pressure during the New York weekend closure suggest that the market is indecisive.

Bullish Scenario
If the price stabilizes and forms a minor ascending triangle, a bullish breakout could be expected, potentially leading into a larger ascending triangle formation. This pattern often resolves to the upside, with a breakout likely on Monday or early Tuesday.

Bearish Scenario
The more probable bearish scenario is a breakdown below the $1.33 level, which would invalidate the micro channel’s bullish structure. A move towards $1.32, the lower support of the ascending wedge, would then be anticipated, signaling a deeper correction.

Key Levels to Watch
Immediate Resistance: $1.343 (Confluence of macro and micro channel resistance, Fibonacci golden pocket).
Micro Channel Support: $1.331.
Critical Support: $1.32 (Lower boundary of the ascending wedge).
A break above $1.343 would reaffirm the bullish momentum, while a decline below $1.331 could trigger a bearish move towards $1.32. Stay vigilant for price action around these key levels as they will define the next directional move.

May The Force Be With You All.