The GBP/USD currency pair formed a longwick bearish candle stick pattern close to the 78.6% Fibonacci at 1.276. The long wick candlestick interprets as a signal for trend reversal.
Concurrently, the stochastic oscillator is in oversold territory on the daily chart, increasing speculation about a shift in the trend from bullish to bearish.
GBP/USD Technical Analysis 4-Hour Chart
As of writing, Pound Sterling trades at about 1.27 against the U.S. Dollar, slightly above the EMA 50 and 61.8% Fibonacci level. As the image shows, the price ranges upward in the bullish flag, which signifies the robust uptrend.
Interestingly, the awesome oscillator signal divergence while the red bars are clinging to the signal line. Adding the AO divergence in the 4-hour chart to the long wick candlestick pattern in the daily chart increases the assumptions of a shift in the trend or the beginning of a consolidation phase.
Technical Indicators Point to Bullish Market Trends
The relative strength index value is 51, trying to stabilize the position above the 50 levels, while the stochastic %K line value is 31, showing bullish momentum in the market.
These developments in the technical indicators in the 4-hour chart suggest the market is bullish, but the trend could reverse and aim for lower support levels.
£1.266, the Key Level for the Market
The immediate support is the 61.8% Fibonacci at £1.266. If the price dips and closes below this support, the selling pressure that began on Wednesday could extend to 50% Fibonacci at £1.259, a deck backed by the ascending trendline.
GBPUSD – Bulls Set Sights on 2024 High
Conversely, bulls should maintain a position above EMA 50 and the immediate support (1.266). In this scenario, the next target could be testing May’s peak at 1.276, followed by 1.289, the 2024 all-time high.