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In the last two Saturday forecast videos, I’ve pointed out a wedge pattern on GBPUSD.
It’s unique in that the top of that wedge is actually the bottom of a descending channel that dates back to December of last year.
Nonetheless, the GBPUSD had a decision to make this week.
As you can see from the chart below, Monday’s session closed below 1.2360, which is the support level I pointed out in Saturday’s forecast video.
We can also see where GBPUSD tested that 1.2360 area as new resistance on Tuesday.
So far, that area is holding.
As long as GBPUSD stays below 1.2360 on a daily closing basis, I favor a move lower into 1.2200.
That’s the next key support level I mentioned on Saturday.
Below 1.2200, we have 1.2000, followed by 1.1780.
Just keep in mind that the US dollar index (DXY) is directionless as of this writing.
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Although the DXY is overweight the euro, it does still play a role in the direction of the GBPUSD and other majors.
For instance, it’s no coincidence that the DXY consolidation above started in late March, which is the same time the pound began forming the wedge pattern below.
But as of now, GBPUSD looks set to retest 1.2200 and perhaps 1.2000.