GBPUSD has been trading in a 215 pip range for over four weeks now. And although the pair saw a significant break of wedge resistance on August 12th that led to a buying opportunity, those buyers have lacked the conviction necessary to push the pound outside of its comfort zone.
That zone is represented by the 1.5465 support level along with resistance at 1.5680. It should be noted that former wedge resistance is now acting as a more immediate support area, made evident by yesterday’s 90 pip rally.
We all know the kind of volatility the FOMC can produce in the Forex market. This volatility is especially noteworthy in US dollar pairs such as GBPUSD. So while today’s event may finally trigger a break, it’s important to play it as safe as possible.
How do we do that, you ask?
Simple. We wait for the day to close before giving further consideration to any opportunity. The technical catalyst for a move higher would only come on a daily close above 1.5680. A close above this level would be significant and would expose the 1.5814 level and possibly the 2015 high at 1.5930.
Alternatively, a daily close back below former wedge resistance would open up the door for a move lower into the range floor at 1.5465. Break that and we could see the pair slide to the July lows at 1.5355 and possibly the June lows at 1.5195.
To reiterate, it’s extremely important to wait for the day to close at 5pm EST before further consideration. The month of August is notorious for serving up false breaks. Combine that with an event as volatile as FOMC and the need for patience becomes that much more important.
Summary: Watch for a buying opportunity on a daily close above 1.5680. Key resistance comes in at 1.5814 and 1.5930. Alternatively, a close below 1.5465 would expose the next support level at 1.5355. Break that and we could see the pair reach 1.5195.