GBPUSD is pulling back after a strong rally, with the pair hovering above the critical 1.3100 support level.
In today’s video, I discuss whether this could signal a potential breakdown and what the recent EURUSD and DXY movements mean for the pound.
GBPUSD is pulling back this week after an impressive rally earlier this month.
The euro is also experiencing a significant pullback, which could be an early warning sign for the pound.
Currently, GBPUSD remains above its key support area at 1.3100.
However, EURUSD is breaking down from its must-hold level, as discussed in Wednesday’s video.
Since the euro and pound often move together, today’s EURUSD breakdown could foreshadow a similar move in GBPUSD.
We’re also seeing the DXY break above 101.13 today.
This has been my trigger for dollar longs toward resistance levels like 101.60 and 102.00 to 102.40.
That said, GBPUSD needs to break below 1.3100 on higher time frames to confirm a technical breakdown.
A sustained break below 1.3100 would confirm a fakeout and open up downside targets like 1.3000 and 1.2890.
Remember that the US dollar index faces a critical test in the 102.00 region, so waiting for a reclaim there before looking for GBPUSD shorts is advisable, in my opinion.
