GBPUSD Nears a Multi-Year Resistance, Develops a Double Top
The GBPUSD pair rose sharply today on the better-than-expected labour market numbers for April. Unemployment fell by 0.1 per cent while the number of people claiming benefits decreased by 15.1 thousand.
The GBPUSD is trading just below the historic resistance level at 1.42430, which was last broken in April 2018. The sheer prominence of this level alone could at the very least cause a minor disruption to the underlying uptrend. This is what happened the last time that the price action tested the resistance.
The resulting Left Top was exemplified by a Shooting Star candle, which signalled an imminent reversal. If the current upswing is terminated below 1.42430 yet again, this would signal the completion of a Double Top pattern.
Double tops are typically taken to signify likely bearish reversals, which could result in a new correction headed towards the next psychologically significant target at 1.40000 or the 23.6 per cent Fibonacci retracement level at 1.38730.
While the MACD indicator underscores the prevailing bullish momentum in the market at present, the price action is nearing the upper boundary of the ascending channel. This, too, could end up catalysing a new bearish correction.
The GBPUSD is trading just below the historic resistance level at 1.42430, which was last broken in April 2018. The sheer prominence of this level alone could at the very least cause a minor disruption to the underlying uptrend. This is what happened the last time that the price action tested the resistance.
The resulting Left Top was exemplified by a Shooting Star candle, which signalled an imminent reversal. If the current upswing is terminated below 1.42430 yet again, this would signal the completion of a Double Top pattern.
Double tops are typically taken to signify likely bearish reversals, which could result in a new correction headed towards the next psychologically significant target at 1.40000 or the 23.6 per cent Fibonacci retracement level at 1.38730.
While the MACD indicator underscores the prevailing bullish momentum in the market at present, the price action is nearing the upper boundary of the ascending channel. This, too, could end up catalysing a new bearish correction.
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