Another Round of Correction
There is a corrective action currently around the GBP/USD currency pair following a juggernaut rally session on Wednesday from the low point of 1.2973. The cable pair has experienced a correction to an almost 20-period exponential moving average while it is giving an optimized and rare opportunity for investors in the pound sterling to go into a period of stronger reversal.
GBP/USD price chart. Source TradingView
The double bottom that has been formed on the four hourly scale looks more lucrative for bullish traders of the cable pair. The pair has shown sheer upward movement after it retested the low point of the month of March, which was around the 1.3000 psychological support level.
The chart pattern of a double bottom gives an indication of a reversal from bullish trends as there is the reality of a lack of sellers who deal in high volume while they are retesting the critical bottom. The trendline that has been active from the high point of the 3rd of March at 1.3418 converged with the highpoint of the 23rdof March at 1.3299 and is set to keep acting as a major obstacle.
A solid movement in the oscillator’s momentum and relative strength index is showing a shift away from the bears that have been dominating the scene.
A pullback of correction in the direction of the 20-period exponential moving average standing at 1.3068 is going to seem like an optimized purchase for the eager investors. Such development is going to potentially drive the pair in the direction of the resistance point at the round level, which stands at 1.3100. it would then be followed closely by the 200-period exponential moving average at 1.3265.
On the Dollar Side
On the other side, any drop that occurs and gets under the low point of the 8th of April at 1.2982 is going to potentially trigger the US dollar, bullish traders. It would, in turn, potentially send the pair in the direction of the low points and the round level support line of the 2nd of November at 1.2854 and 1.2800 in that order.
Traders are closely watching the effects of every monetary policy of various central banks of the financial market, especially the US Federal Reserve, as it seems that a lot of events take a cue from it. The war in Ukraine also keeps weighing on the GBP/USD currency pair as sanctions against Russia send oil and other commodity prices skyrocketing.