On the daily chart below, we can see that the price started to consolidate near the neckline of the possible double top. Generally, when there’s a divergence between the double top and an oscillator like the MACD in this case, the chart pattern is more reliable.
To be confirmed, the price needs to break decisively below the neckline and it looks like the market is awaiting new key economic reports like the NFP on Friday or CPI the next week before getting the conviction and the momentum necessary to break below such a strong level.
For now, the moving averages are acting as resistance maintaining the bearish bias, but they have compressed and are now threatening a cross to the upside.
On the 4 hour chart below, we can see that the price couldn’t break the trendline on the first try, but it’s now probing again above it. The range is clear with the resistance at 1.2143 and the support at 1.1922. The buyers may now target the top of the range if the break above the trendline is successful.
The sellers may want to wait for the price to return back below the trendline to gain more conviction and pile in ahead of the break below the support. We have Fed Chair Powell testimony today, and it’s expected that if he sounds dovish risk assets will rally and support GBP/USD upside. On the other hand, a more hawkish Powell should cause risk aversion and support the US Dollar.
On the 1 hour chart below, we can see that the current breakout of the trendline comes with a caveat: there is a divergence between the price and the MACD. This may signal a fake breakout, but it would need a fall back below the trendline to be confirmed. We have also an upward trendline that supports the current uptrend.
The buyers should lean on it in case the price pulls back, but the sellers will eye a break below it to pile in more decisively and start targeting the support.
