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Despite the assumptions of further strengthening of the pound/dollar currency pair, yesterday's trading showed that not everything is so clear and simple. Yes, the pair tried to continue implementing the upward scenario, however, after reaching the level of 1.3479, the bulls on the pound loosened their grip and lost almost all the accumulated growth. As a result, a reversal model of candle analysis appeared on the daily chart, which can be classified as a "Tombstone". This is a fairly strong reversal signal, which is often worked out by market participants. Let's see what happens this time.
At the moment, the GBP/USD pair shows a downward trend. It is worth noting that in addition to yesterday's reversal model of candle analysis, an additional signal for a decline is the bearish divergence of the MACD indicator, which indicates that the British currency is overbought. Now, to continue the upward trend, the bulls on the pair need to absorb the growth of the "Tombstone" reversal candle and close trading above the mark of 1.3479. To be honest, at this stage of time, this is quite a difficult task.
Although today's reports on house prices in the UK were better than expected, market participants ignored these statistics, and sales of the pound continued. If we continue the fundamental theme, today, there will be speeches by the members of the Monetary Policy Committee of the Bank of England - Broadbent and Andy Haldane.
From the US, it is important to pay attention to the data on the change in the number of employees from ADP, as well as to the reports on production orders for July. Also, members of the Open Market Committee of the Federal Reserve Kashkari and Williams are scheduled to speak. All details of these and other events can be found in the economic calendar.
Returning to the technical picture of the GBP/USD currency pair, we can assume that the bulls on the pound are waiting for "bitter bread". The "Tombstone" reversal signal is very strong, and the overbought pair is visible. If the downward trend continues, the pair risks falling to the once-broken resistance level of 1.3265, where the Tenkan line of the Ichimoku indicator is also located. The pair will likely find support here and try to start recovering the losses suffered before.
H4
In the four-hour timeframe, we see that the pound is under quite serious pressure and may continue to fall. In this case, the nearest targets at the bottom will be 1.3282, 1.3265, 1.3243, as well as the 50 simple and 89 exponential moving averages, which are located, respectively, at 1.3227 and 1.3200.
Conclusion and trading recommendations for the GBP/USD pair:
Despite the strong growth and a large bullish candle formed last week, the market is experiencing changes in its attitude to the US dollar. It is still difficult to understand whether this is a corrective pullback or a reversal of the exchange rate. I believe that this will be more certain after the end of the week's trading, which will be crowned by data on the US labor market.
If there are bullish reversal patterns of Japanese candlesticks on the 4-hour and (or) hourly timeframes near all the above levels, I recommend trying to buy the British pound with small goals.
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