The GBP/USD price is currently showing signs of gaining momentum in the short term, but is just a short-term bullishness or will the trend reverse and head lower. Price is currently staying near its resistance level at 1.2449. The price is also approaching the point of control area, where it aligns with the psychological level of 1.2433. The relative strength and momentum indicators suggest a bullish outlook, indicating a potential retest of the 1.2469 level. There are 2 scenarios that might happen.
Scenario 1: Bullish Breakout In this scenario, the GBP/USD price successfully breaks above the resistance level at 1.2449 and continues its upward momentum. The relative strength and momentum indicators remain positive, supporting further gains. The price retests the 1.2469 level and surpasses it, reaching towards the upper range of the long-term consolidation zone. Traders take this as a bullish signal, and the price may potentially target the volume area high around 1.2520 to 1.2537. Positive economic data and market sentiment favor the British pound, providing additional support for an extended bullish move.
Scenario 2: Bearish Reversal In this scenario, the GBP/USD price fails to break above the resistance level at 1.2449 and encounters selling pressure. The price retreats from the point of control area and struggles to maintain its bullish momentum. The relative strength and momentum indicators start to weaken, indicating a potential bearish reversal. The price tests the support level at 1.2424 and breaks below it, leading to a further decline. Traders perceive this as a bearish signal, and the price may find support at the volume area low around 1.2391, near the 25% Fibonacci retracement level. Negative economic news or market uncertainties contribute to the bearish sentiment, potentially driving the GBP/USD pair lower within the broader consolidation range.
Looking ahead, it’s important to note that the price of GBP/USD may remain within a long-term range, extending from the psychological test area low at 1.2400 to the volume area high near 1.2520 to 1.2537. Currently, the price is situated between the 50-day and 200-day moving averages, suggesting a consolidating phase. Monitoring these key levels and observing the broader macroeconomic themes will be crucial in forecasting the future direction of GBP/USD.