Today I’m going to show you exactly how I’m trading GBPUSD this week.
Check out the GBPUSD video below and scroll down for the annotated charts and analysis.
Last week, I wrote about the must-hold area for bulls at 1.2740.
It’s the intersection of the August trend line and a critical horizontal level from 2020.
The pair broke above this area last week, so it’s up to GBPUSD bulls to hold it as new support.
However, the big test for bulls will be Wednesday’s UK Consumer Price Index (CPI) figure and Thursday’s Bank of England (BOE) rate decision.
Those are high-impact events for GBPUSD, so expect intense volatility over the next 48 hours.
As for the technicals, the 1.2740 area is a must-hold support for bulls.
Bullish price action from here this week may extend the rally toward 1.3000.
Alternatively, a sustained break below 1.2720 would signal a confirmed fakeout and send GBPUSD back to the October trend line at 1.2500.
Not only that, but a fakeout at an area this significant would likely trigger a more substantial correction for the pound.
But as of now, GBPUSD is holding support, and trading the pair is risky ahead of this week’s CPI and BOE announcements.
Given my stance on the US dollar and the stock market, I prefer to trade a fakeout.
It aligns with my views elsewhere and would offer a more favorable risk to reward.
As always, I’m staying flexible and waiting for the market to show its hand before I put any capital at risk.
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