GBPUSD has been a challenging pair to read and even harder to trade since December.
However, the recent price action on the US Dollar Index (DXY) and even the pound’s counterpart, the EURUSD, offer some clues.
I discuss those clues in today’s video and share an update on the DXY.
Watch the video below and scroll down for the annotated charts and analysis.
GBPUSD has been sideways since December, making it an unfavorable currency pair to trade.
However, an opportunity may be close.
We’re seeing early signs of weakness from the euro while the DXY attempts to break above 103.50.
Furthermore, the longer a market consolidates, the more explosive the eventual breakout is likey to be.
So, although GBPUSD is uneventful right now, the fact that this consolidation has lasted for months makes it one to watch.
We also have some lower highs developing on GBPUSD since December 28th.
That could hint at weakness, especially as the EURUSD starts to break down this week.
Key support for GBPUSD comes in between 1.2550 and 1.2615, with a sustained break below the former exposing 1.2380.
Alternatively, a sustained break above 1.2800 is needed to negate the bearish idea.
I remain bullish on the US dollar and bearish on GBPUSD while below 1.2800.
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