- GBPUSD bulls could be about to come in to pick the low hanging fruit.
- The sell-off has been sharp, but the formation of the M is a reversal pattern.
The GBPUSD is offered as the dollar and yields rallied due to US Treasuries selling today at 4.140% vs. 4.106% in the run up to the WI market auction. Since the sale, profits have been erased and cable remains under pressure. Results so far from the US mid-term elections have shown little sign of a “red wave”, leaving investors focused on upcoming inflation data. However, from a technical point of view, a reversal could occur to the extent that the market calms down before the event, as illustrated below:
GBPUSD H1 Chart
The bears have moved on and are eyeing the break of the support line at 1.1290, Monday’s low. However, a correction could occur in the meantime.
GBPUSD H4 Chart
The M formation is a reversal pattern and the price is expected to retrace to at least the 38.2% Fibonacci of bearish momentum.
Source: Fx Street
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