The GBPUSD is holding up relatively well so far this week when you consider how USD bulls are on the move again.
I mentioned the 1.2770 support area in Saturday’s forecast video.
You can see how this region helped support the GBPUSD in February before flipping to resistance in May and June.
That means any retest of 1.2770 should attract buyers.
However, the GBPUSD is in consolidation mode, and there’s no sign of that letting up anytime soon.
It isn’t a surprise to see the pound consolidate up here, though.
Some sideways movement is warranted following the impressive 800 pip rally through mid-October.
You can also see how the 1.2990 area has attracted sellers since October 17.
Notice how this region supported the pair between February and April.
The question now is, will GBPUSD close below 1.2770 or above 1.2990?
That will determine the pair’s likely path forward, in my opinion.
But anyone attempting to short the pound against the greenback needs to respect the fact that the pair is carving higher highs and higher lows.
As long as that’s the case, the short-term bullish momentum is intact.
And so far, the consolidation that began in the second half of October looks relatively constructive.
I don’t see anything to make me think buyers have folded, at least not yet.
Any bullish price action following a retest of 1.2770 could present an opportunity to go long for a move back to the 1.2990 region.
A daily close above the range top at 1.2990 would also indicate strength and expose the next key resistance at 1.3170.
On the flip side, a daily close below 1.2770 would suggest weakness and would also open the door to the 1.2570 support region.
Just be sure to respect the potential of a false break either way.