FX.co ★ GBP/USD

GBP/USD H4 Timeframe: The GBP/USD H4 chart shows the price is in a recovery phase after a prolonged decline since early October. The two main indicators used, the 100-period Moving Average (MA 100 – blue line) and the 200-period Moving Average (MA 200 – red line), provide a fairly clear picture of the market structure and potential future direction. Throughout the decline, the price consistently moved below both moving averages, indicating strong bearish pressure. The 100-period MA also remained below the 200-period MA for a significant period, reinforcing the downtrend signal. However, conditions began to change when the price broke through the 100-period MA from below and began consolidating near the 200-period MA. A break above the 100-period MA is usually an early signal that bearish momentum is weakening, while market sentiment is shifting toward neutral or even bullish. The price reaction to the 200-period MA is crucial because this line is often considered a psychological boundary between medium-term bearish and bullish trends. On the chart, the price appears to have tested the 200-day moving average (MA) but has not been able to firmly break through it, indicating significant dynamic resistance.

If the price manages to break through and maintain above the 200-day moving average (MA), the likelihood of a bullish trend change increases. This could push the price to test the nearest resistance area, which appears around 1.3289 and then 1.3370. However, if the price fails to break above the 200-day moving average (MA) and instead bounces down, it would indicate continued seller pressure. This scenario could lead the price to retest the nearest support area around 1.3080 and even weaken further towards the 1.3010 area. Current conditions suggest a potential bearish-to-bullish transition phase, but full confirmation is not yet available. The 100-day moving average (MA) is beginning to curve upward, indicating accelerated short-term momentum, while the 200-day moving average (MA) is still trending downward, suggesting a bearish trend. Therefore, traders should pay attention to the interaction of price with these two moving averages to determine the next direction. A bullish breakout above the 200-day moving average (MA) indicates a strong trend change. However, if this fails, the market is likely to revert to its previous downward pattern.