GBP/USD Turns Bearish After Soft Data Confirms the Economic Struggle
[[GBP/USD]] turned really bullish by the middle of October, after the Brexit deal was reached. This pair climbed around 800 pips during that surge, but the climb stopped right at the big round level at 1.30 and since the last week of October, this pair has been trading sideways between 1.30 and 1.28.
Last week we saw GBP/USD turn bullish and climb from the bottom of the range to the top. But the climb ended below the 1.30 level once again and since then the price has been sliding lower. Yesterday we saw GBP/USD form an upside-down hammer candlestick,which is a bearish reversing signal and this pair turned bearish after that.
The price found support at the 200 SMA (red) on the H1 chart and bounced from there, but the 50 SMA (yellow) turned into resistance today. A while ago, the UK manufacturing and services PMI reports showed that manufacturing fell deeper in contraction, while services joined as well, as they fell into contraction for the first time in a long period.
As a result, this pair turned lower again, with the 50 SMA after forming yet another upside-down hammer candlestick, which shows that these candlesticks are great signals for reversals. Now the price has fallen below the 200 SMA. Right now it is retracing higher and we might decide to go short on this pair when it reaches the 200 SMA, which will likely turn into resistance now. Hopefully, we will get another reversing signal up there.
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