Forex Trading: GBP/USD downside paused May 19, 2018

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The GBP/USD drop was stopped by a major dynamic support, but you should know that the perspective remains bearish. Price has moved sideways before it could resume the downside movement. Maybe this it was a distribution before the rate will start to drop again.

The USD is still very strong as the dollar index has resumed the upside movement and has reached fresh new highs. The Pound has increased a little versus the Yen and versus the Euro but remains sluggish.

GBP/USD could increase a little on the short term if it will be rejected again by the near term dynamic support.

USDX continues to pressure the first warning line (wl1) of the minor ascending pitchfork and remains to see if will have enough directional energy to make a valid breakout. It is somehow expected to climb towards the first warning line (WL1) of the major descending pitchfork if will stay above the wl1.

Another false breakout will send the rate down towards the median line (ml) of the major blue ascending pitchfork and towards the second warning line (wl2) of the minor ascending pitchfork.

A further increase will be invalidated only by a valid breakdown below the median line (ml) of the major ascending pitchfork.

The rate continues to stay right above the second warning line (WL2) of the major descending pitchfork. It was somehow expected to increase a little towards the median line (ml) of the minor descending pitchfork after the failure to reach the lower median line (lml), but the buyers weren’t strong enough.

A valid breakdown below the WL2 will signal a further drop. It could turn to the upside only if the USDX will turn to the downside.  This scenario will take shape only if the fundamental factors will take the full control on the short term.

Only a breakout above the median line (ml) of the descending pitchfork could signal another larger rebound.

 

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