The GBP/USD is jumping, it is breaking one resistance level after another, as the moves are caused by Brexit associated announcements.
In general, concentrate on the news instead of the technical charting methods. The reason for this is the fact that all technical methods concentrate on historical data.
At the moment we are experiencing an unprecedented event, which each market participant sees differently and subjectively.
The Federal Reserve released on Wednesday the US FOMC Meeting Minutes where fed officials provide in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year. Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet," the document said.
Only US GDP will influence the GBP/USD
As it is accustomed, the last week of the month is set to be quiet for fundamental macroeconomic data releases.
The macro week will start on Wednesday. At 13:30 GMT the Canadian CPI data will be published.
On Thursday the US Advance GDP will be released at 13:30 GMT. This event can cause moves of around 20 base points.
On Friday, the Canadian GDP data will be out at 13:30 GMT. It is most likely set to be the event which will cause the biggest move during this week.
For more information watch the weekly calendar analysis stream on our youtube channel.
GBP/USD short term review
The GBP/USD surged, as soon as it passed the resistance of the 1.3100 level. Soon after the event the rate touched the weekly R1 at the 1.3149 level. By the middle of Tuesday's trading the rate was testing a strong resistance cluster at the 1.3160 level.Near that level a Fibonacci retracement level and a dominant trend line of a large scale descending pattern are located at.
If this cluster gets broken, the pair will approach the 1.3200 level, which is providing psychological resistance and is being strengthened by the upper trend line of the largest scale channel down pattern. Zoom out to see the larger patterns better.
Hourly Chart
On the daily chart the recent moves have been consistent with a dominant ascending pattern that was drawn by our analyst last Wednesday.
Judging by the fact that the dominant patterns of the hourly chart have been broken, most likely a full review of the trends will be conducted in the near future.
However, as the Brexit deadline approaches, the patterns are expected to be less and less relative.
Daily chart
By the middle of Tuesday's trading the sentiment was 66% short. Traders want to short the retracement of the recent jump.
Meanwhile, the trader set up pending orders were set to sell the GBP/USD even more. In the 100-pip range around the rate 55% of orders were set to sell.
The orders are most likely set up by those who want to open a short position when the rate begins to retrace downwards.