GBPUSD Double Top

The recent test of the 1.4248 level highs was accompanied by plenty of bearish divergence on both the MACD and RSI indicators. With price having subsequently failed at the level and turned lower, breaking through support at 1.3997, there is now the risk of a large double top at play. Price is currently sitting on trend line support which can be seen as the sloping neckline of the pattern. A break below the current lows will open the way for a test of the 1.3676 and 1.3461 levels next. Bulls will need to see a break back above 1.3997 to negate this view. The retail community is starting to rebuild long positions here, suggesting there is further to go lower.

Key Data to Watch

Alongside the raft of USD releases this week, which could propel USD higher on upside surprises, the main event will be the BOE meeting. Given the postponing of the end of lockdown and the government’s refusal to rule out any further delays, traders will be keen to see how the BOE judges the economic risks around the situation. Fundamentals have been improving steadily this year though the growing risk of a third wave now raises question marks which traders will be looking to the BOE to answer.