FX.co ★ GBP/USD

I recognize that the market doesn't owe anyone anything, and we are all just adjusting to its movements. The pound is currently hanging on to marginal zones, which is concerning to me because these zones have barely begun to develop and are teetering on the edge after such a prolonged rally. I’ve noticed that margins have reversed downward, signaling a technical breakdown, so I’m leaning towards considering southern options. I’ve observed a pullback to the first marginal pullback zone at 1/4, specifically around 1.3420, and I see that we are currently stuck at this level. Yesterday, I saw a southern stop candle form at the end of the day, but it’s not definitive—neither above nor below—so today, I feel it’s necessary to wait for the extremes to be updated. I’m paying close attention to how the market behaves as it updates the high, continuing the northern pullback toward the 1/2 zone at 1.35. However, I’m not particularly interested in pulling back to that level. I know the market won’t care about my preferences, but I would prefer to see a continued decline from the 1/4 zone, or ideally, an even deeper drop. I believe that if the second pullback zone drops further, then we could expect a correction to the 1/2 zone, but right now, that scenario doesn’t seem very suitable to me. My target remains at 1.3246, and I’m patiently waiting for that level to be reached. After seeing the bullish engulfing candle, I also observed that the next candle had a long shadow above, which I interpret as an invalidation of the engulfing pattern. I find myself getting more philosophical with this trading, and if the zigzags leading up to the southward reversal on the higher-order pairs hold true, I believe the second target at 1.3085 will be reached quickly.

I believe that the current market conditions on the H4 chart suggest a potential buy signal based on moving averages, which could indicate a renewed growth momentum if executed. At this point, however, I can only speculate on the outcome. I’ve drawn a Fibonacci grid on the chart, taking into account key levels, with the 50% retracement level at 1.34377 being the trigger for a signal. I consider this level crucial as it sets the benchmark for potential upward movement, with my target price at 1.35350, which I have marked in green. I’m also monitoring the red level at 1.33405, as I’ve set it as a cancellation point for the signal; if prices fall below this level, I believe the bullish outlook would be invalidated. As I examine the market, I notice that the 50% level failed to act as strong support, which led the price to drop below it, specifically reaching the "1 to 2" grid level. I’ve named this level this way because, based on my analysis, entering trades from here gives traders a favorable 1 to 2 risk-to-reward ratio, which I find quite attractive. I observed a bullish engulfing candle forming at this level, and from my experience, this pattern usually signals a good chance of a continuation in the upward direction. I feel this creates an opportunity to potentially capitalize on a continued growth phase, though I remain cautious as the pound seems to be teetering between two possible scenarios. I believe that, for now, I need to wait for further confirmation before making any decisions, but I’ll continue to monitor how the price behaves at these critical levels.