FX.co ★ GBP/USD

The recent pullback of GBP/USD must be considered in the framework of a much bigger bullish market structure that is in the progress of building up in the recent weeks. Even after the steep drop in the intraday on the announcement of the policy of the Federal Reserve, price movement is above the important intermediate, support levels, and the overriding trend has not yet been disproved. The two are still trading in an ascending formation of increasing highs and lows with the most recent sale being more of a correction than a reaction. The overall bullish trend will still be present as long as price does not fall below the late-January swing lows. Structurally, the progress that had started earlier in the month had formed an unambiguous bullish leg that had taken the duo to the 1.3800 area. This stage has also turned out to be a pivotal psychological and technical deterrent, as it has continued to be a point of selling action and an excusation of gains. Failure to close above 1.3800 on a daily basis has led to short-term profit taking pushing the two towards the support areas. However, the pullback has up to this point observed the lifting structure of the trend, where the buyers have been stepping in before the trend is furthering the retracements. The range of 1.3740-1.3700 describes a significant demand area in the existing structure. The short term low of 1.3742 coincides with the minor horizontal supports based on the past consolidations and short term swing lows. The above zone would maintain the market in a consolidation reinstate instead of a trend reversal. Any prolonged decline below this level would reveal the January 27 low of 1.3668 which is a more conclusive structure. This is the point where the latest bullish impulse is based and a boundary between continuation and more expansive correction. In case price should close below 1.3668 each day, this would indicate a swing in the short-term positivity, and a further pullback to the 1.3600 handle would be possible. The first round is 1.3600 which also coincides with the past resistance which has since converted into a potential support. A trend into this space would probably draw in new purchasing enthusiasm yet inability to maintain over this would imply that the bullishness is decaying and the market might either reach out to a bigger zone or a period of correction. On the positive side, the 1.3800 level will continue to be the major hurdle among buyers. Preceding highs and psychological importance support this zone and this makes it an instinctive target of sellers. Any convincing close above 1.3800 per the day would be a good indicator of the continuity of the bulls and the rejection of the prevailing corrective pull back. In such a case, the price would tend to project to the next resistance band of 1.3870-1.3900 where supply levels in history and previous distribution are found. On top of that, the 1.4000 level of the psychological level would be in the limelight which is a long-term bullish goal. The recent price action indicates consolidation under the resistance other than distribution. Candlestick pattern depicts comparatively weak pullbacks, which implies that the selling force has no strong follow-through. This kind of price future activity usually leads to yet another attempt at a higher price so long as key supports are not broken. The market seems to have developed an energy between the 1.3700 support and 1.3800 resistance and it forms a compression zone and this may end up solving itself in the direction of the trend. In general, GBP/USD is technologically optimistic regardless of the fluctuations in the short term. The bullish trend formation remains intact provided that price does not drop below 1.3668 with the 1.3700 area serving as the direct support. An established upsurge of 1.3800 would reassert the ascending momentum and open up to greater resistance areas whereas a long-term decline to 1.3668 would refocus the emphasis to 1.3600 and even indicative of an extended corrective stage. Price will probably stay in the range until either boundary is decisively broken, and the overall direction is still upwards.