- GBP / USD managed to attract some buying for a straight day on Thursday.
- The recent price action constitutes the formation of a symmetrical triangle on the hourly charts.
- Neutral technical indicators warrant caution before placing aggressive directional bets.
The pair GBP/USD it continued with its bidirectional price moving around the 100 hourly SMA pivot point and remained well confined within the trading range of the previous day. The pair was last seen hovering around the 1.3780 region, almost unchanged for the day.
Looking at the technical picture, the pair has been oscillating between two converging trend lines since the beginning of this week. This constitutes the formation of a symmetrical triangle on the 1 hour chart, indicating indecision between traders.
Indecision is reinforced by neutral technical indicators on hourly / daily charts. This, in turn, justifies the caution of aggressive traders and makes it prudent to wait for a sustained breakout through the triangle before placing directional bets.
Meanwhile, the upper bound of the triangle coincides with the 38.2% Fibonacci level from the recent drop from 1.4002-1.3671 to multi-week lows. Some subsequent purchases will be seen as a new trigger for bull traders and will pave the way for additional profits.
The next relevant hurdle is pegged at the 50% Fibonacci level, around the 1.3835 region before the weekly highs near 1.3850. Above the aforementioned barriers, the GBP / USD pair appears poised to accelerate the positive move and aim to regain the round 1.3900 figure.
On the other hand, the 23.6% Fibonacci level, around the 1.3745 region, closely followed by the triangular support, could protect the immediate downside. A subsequent decline will make the GBP / USD pair vulnerable to further weakening below 1.3700 and will test multi-week lows, around the 1.3670 region.
1 hour chart
Technical levels
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