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The GBP/USD pair has made a bearish channel shown in black. It rose on Tuesday as investors cheered the Brexit agreement and retested the upper side of this channel.
- Sell the GBP/USD pair and set a take-profit at 1.1985.
- Add a stop-loss at 1.2145.
- Timeline: 1 day.
- Set a buy-stop at 1.2090 and a take-profit at 1.2150.
- Add a stop-loss at 1.2000.
The GBP/USD pair retreated slightly as the enthusiasm of the Brexit deal negotiated by Rishi Sunak waned. After rising to a high of 1.2142 on Tuesday, the pair retreated to 1.2065 as the US dollar bounced back. Focus among traders will be on the upcoming US and UK manufacturing PMIs scheduled for Wednesday.
These numbers will provide more clarity about the state of the economy, with most analysts expecting the manufacturing sector to remain in the shrinking area. However, the data will likely not change the view about what to expect from the Bank of England (BoE) and the Federal Reserve.
The GBP/USD pair has made a bearish channel shown in black. It rose on Tuesday as investors cheered the Brexit agreement and retested the upper side of this channel. The pair has now pulled back slightly and is nearing the 25-period and 50-period moving averages. It has also moved slightly below the 61.8% Fibonacci Retracement level while the Relative Strength Index (RSI) has drifted downwards.
The pair is also approaching the first resistance of the Woodie pivot points. Therefore, the outlook remains bearish, with the next level to watch being at the pivot point at 1.2000. A drop below that level will open the possibility of the pair moving to the lower side of the descending channel at about 1.1925.
The stop-loss of this trade will be at this week’s high of 1.2145, which is also the upper side of the descending channel.
The two-hour chart provides more color about what is happening. The pair rose to a high of 1.2145 on Tuesday, where it struggled to move above on February 21st. It has formed what looks like a double-top pattern, which is usually a bearish sign. Its neckline is at 1.1926, which was also the lowest point on February 17.
Like in the four-hour chart, it has moved above the 25-period and 50-period exponential moving averages and the Ichimoku cloud. The histogram of the MACD is about to turn red while the two lines are about to have a crossover. It also formed a shooting star pattern.
Therefore, the pair will likely continue falling, with the next key support being at the psychological level at 1.2000 followed by 1.1917. Like in the four-hour chart, the stop-loss of this trade will be at 1.2145.
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