GBPUSD Deviation Hints at Weakness

GBPUSD is in a long-term downtrend but a short-term uptrend.

So without a shift in the secular downtrend marked by a higher macro high, any rallies are corrective and thus prone to fail.

We may be witnessing one such failure this month.

The GBPUSD has trended higher since late September, carving higher highs and lows.

However, the daily and weekly time frames suggest weakness that began last Thursday.

You can see from the weekly chart above that GBPUSD formed a rather bearish-looking candle last week at the 1.2300 handle.

It isn’t a bearish engulfing candle, nor is it a pin bar, but it does suggest fatigue from bulls.

But the daily time frame (below) is arguably more telling with a deviation/fakeout above the 1.2300 level last week.

Notice in the chart below how GBPUSD closed above 1.2300 on Tuesday and Wednesday of last week, only to close back below it on Thursday.

That close back below confirmed the bearish deviation, also called a fakeout.

From here, any retest of 1.2300 as new resistance could present a short opportunity.

That said, expect volume to be lighter than usual with the holidays, which means more erratic and indecisive price action.