GBPUSD reclaimed a significant level on Monday, but buyers could find themselves offside this week.
Check out today’s video to learn why I’m staying cautious on GBPUSD despite Monday’s rally.
GBPUSD started the year with a sharp decline below the 1.2485 key level.
Buyers stepped in at 1.2380 support, which was a level and target I mentioned in December.
So far this week, buyers have reclaimed the 1.2485 level on a daily closing basis.
However, as I mentioned in my EURUSD video on Monday, this week’s closing price will be the key for the pound.
Those calling this a significant bottom for GBPUSD are overlooking one critical factor.
Since last week closed below 1.2485, the pound remains technically below the level on a weekly closing basis.
Additionally, this week’s forex calendar is packed with market-moving events like the US ADP employment change, FOMC minutes, and non-farm payroll (NFP).
Friday’s NFP will be particularly telling, as it happens just before the weekly close.
The bottom line is that more time is needed to make a probable call here.
If GBPUSD closes this week above 1.2485, we could see at least a local bottom form toward levels like 1.2620.
On the other hand, a weekly close below 1.2485 will keep the bearish momentum intact toward levels like 1.2380 and potentially 1.2200.
Lastly, don’t overlook the significance of the 2022 trend line I’ve highlighted several times on this website.
GBPUSD is testing the underside of that broken level this week at 1.2575, leading me to believe the bottom is not yet in for the pound.
