- GBPUSD could be headed for a test of a 1.2050s supporting area that has a confluence with the 78.6% Fibonacci.
- Bulls eye a run to a 38.2% Fibonacci as a prospect for the day ahead if bulls emerge again between 1.2050/1.2010.
GBP/USD was a fake breakout scenario on Wednesday in what was a mixed market and during a phase of consolidation following Fridya’s blow-off pertaining to the US Nonfarm Payrolls data. Bulls remain under pressure on attempts to move higher due to a resilient US Dollar and it has been a fade on rallies for the best part of the week so far.
The following illustrates the current boundaries and structure and offers neutral bias in so much that the price remains contained between 1.2110 and recent higher lows with failures to convince on the bid.
GBP/USD H1 chart
The schematic is pretty neutral given the phase of consolidation and the fact that the price has slid out of the bullish trendline and is now on the backside of it. A fresh dynamic trendline is being carved out but there are prospects of a move lower given the trapped volume up high and the market’s tendency to move away from positions that are under heat in such a scenario due to the failed breakout to the 38.2% Fibonacci on Wednesday.
GBP/USD 78.6% Fibo eyed
Therefore, if we assume that a bull trap has been laid, if only momentarily, then it is safe to presume that the market is headed for a test of a 1.2050s supporting area that has a confluence with the 78.6% Fibonacci as illustrated above. However, while above there, albeit with risks all the way to the price imbalance near 1.2010/20, the 38.2% Fibonacci is still a prospect for the day ahead and we could see bulls emerge again between 1.2050/1.2010.