On Wednesday, the GBP/USD reached the upper trend line of the channel down pattern, which has guided it since the start of June.
Various technical indicators showed that the rate would bounce off from the trend line and decline back to the 1.2254 level.
Economic Calendar
The main scheduled macroeconomic data release of the week is bound to occur on Thursday, at 12:30 GMT. At that time the US employment data sets are scheduled to be published.
On Wednesday, note that some calendars show the ADP Non-Farm Employment Change and the US ISM Manufacturing PMIs as high impact events, but they have not caused an increase of volatility.
Take a look at all of the historical reaction tables by clicking on the link below.
GBP/USD short-term review
On Wednesday, the GBP/USD exchange rate jumped to the resistance formed by the weekly PP, the 200-hour SMA, a pattern's resistance line and a 50.00% Fibonacci retracement level near 1.2400. The rate was testing the given resistance.In theory, the rate should bounce off such a strong resistance cluster. In this case it would look for support first in the 100-hour simple moving average at 1.2361 and afterwards the 55-hour SMA at 1.2335.
However, if the rate is pushed up by a fundamental event, it would then have no resistance as high as the 1.2483 level, where a monthly pivot point was located at.
Hourly Chart
On the daily candle chart, the pair faced additional resistance from the 55-day simple moving average, which was located at 1.2416.
Meanwhile, the rate continues to trade in a channel down pattern. The pattern captures the GBP decline against the USD that was caused by different policies of the underlying central banks.
The Bank of England is increasing the GBP money supply. Meanwhile, the US Federal Reserve kept its policy unchanged in June.
Read more in the June Central Banks Updates article.
Daily chart
Read More: Technical Analysis
Long sentiment increases
Since late Monday, 61% of trader open position volume on the Swiss Foreign Exchange was in long positions.
At mid-day on Wednesday, the sentiment grew to 63% long.
Meanwhile, in the 100-pip range around the rate, 59% of pending orders were set to buy the GBP/USD.
The orders were 60% to sell on Tuesday. It appears that traders expected the recent recovery, but had their stop losses near the 1.2250 mark.
At mid-day on Wednesday, the sentiment grew to 63% long.
Meanwhile, in the 100-pip range around the rate, 59% of pending orders were set to buy the GBP/USD.
The orders were 60% to sell on Tuesday. It appears that traders expected the recent recovery, but had their stop losses near the 1.2250 mark.