GBP/USD faced rejection near 1.2700 and declined heavily.
A major bearish trend line is forming with resistance at 1.2670 on the 4-hour chart.
EUR/USD is also trading in a bearish zone below 1.0700.
The US Gross Domestic Product could grow by 1.3% in Q1 2024.
GBP/USD Technical Analysis
The British Pound failed to recover above the 1.2700 resistance against the US Dollar. GBP/USD started another decline and traded below the 1.2665 support.
Looking at the 4-hour chart, the pair settled below the 1.2665 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). It seems like the bears are aiming for a move below the 1.2600 support.
On the upside, the pair is facing resistance near the 1.2655 level. The next resistance sits at 1.2670. There is also a major bearish trend line forming with resistance at 1.2670 on the same chart.
The first major resistance is near the 1.2700 level and the 200 simple moving average (green, 4-hour). A clear move above the 1.2700 resistance might send it toward the 1.2725 level and the 100 simple moving average (red, 4-hour).
The main resistance is now near 1.2780. Any more gains might call for a move toward the 1.2850 level in the near term. If not, the pair might continue to move down.
Immediate support is near the 1.2600 level. The next major support is near the 1.2565 zone. A downside break and close below the 1.2565 support zone could open the doors for a larger decline. In the stated case, the pair could decline toward the 1.2420 level.
Looking at EUR/USD, the pair gained bearish momentum below the 1.0720 level and there are chances of more downsides below 1.0675.
Economic Releases
US Initial Jobless Claims – Forecast 236K, versus 238K previous.
US Durable Goods Orders for May 2024 – Forecast 0% versus +0.6% previous.
US Gross Domestic Product for Q1 2024 – Forecast 1.3% versus previous 1.3%.
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Gold is likely to retest the latest record high and attack psychological $2500 level in coming months, as all key factors that drive the metal’s price remain supportive.
Persisting geopolitical tensions and threats of escalation continue to underpin demand, along with growing signals of stronger monetary easing and one of the most significant – gold purchases by central banks – led by China.
However, overbought conditions on monthly chart and long upper shadows of April/May monthly candlesticks, as well as June’s candlestick so far being in the shape of long-legged Doji, signal rising offers and indecision, indicating that bulls might be running out of steam.
This suggests that metal’s price may hold in extend consolidation, which so far finds ground at $2300 zone, with dips not to exceed solid supports at $2200 (psychological / Fibo 38.2% of $1810/$2450) to keep larger bulls intact for fresh push higher.
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EURUSD was not triggered, as there was no bullish price action when the support level at $1.0863 was first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0784, $1.0834, or $1.0856.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0758, $1.0722, or $1.0709.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
EUR/USD Analysis
In my previous analysis of the EUR/USD currency pair on 20th May, I wrote that the technical picture had become more bullish, with the Euro one of the strongest major currencies. I thought that there may be a chance for a long trade from a bounce at the support level at $1.0863 but this did not set up. I also said there were better assets to trade that day, and that certainly turned out to be true.
The technical picture now is more bearish, but not decisively so. The price was basically consolidating within a predictable range until the shock of Sunday’s calling of a general election in France following terrible EU Parliament election results for President Macron’s party. Macron has no majority in the French Parliament, so he is gambling that the far-right’s very strong showing last weekend might galvanise more centrist voters into voting for Macron again. However, the polls show the far right as likely to assume power, which would be a major political earthquake in France and the EU and will impact the Euro negatively if it happens.
These political events caused the Euro to plummet yesterday, before finding some support above $1.0700 and especially at the key support level at $1.0758 which seems to be holding as the first higher low. The key thing to watch for now is whether this level, let’s call it $1.0750 as that is a confluent major quarter level, holds up over the course of the day. The longer it holds, the more likely we are to see a continued recovery.
The Euro will now come into focus as a currency over the next few weeks and will probably show a higher level of volatility. Although the major far right party in France no longer support an exit from the EU, the Euro will likely trade lower the more polls show it on course for victory.
I think we will eventually see more downwards movement here, although that may be determined over the short term by the US Dollar and its key CPI and FOMC data coming tomorrow.
I think the best approach here is to look for short trades from and failed tests of key resistance levels, and to hold for a swing or even position trade if possible.
There is nothing of high importance scheduled today concerning either the EUR or the USD.
BTC/USD Forex Signal: Inverse Head and Shoulders Pattern Forms
Bullish view
Buy the BTC/USD pair and set a take-profit at 73,650.
Add a stop-loss at 67,000.
Timeline: 1-2 days.
Bearish view
Set a sell-stop at 69,000 and a take-profit at 67,000.
Add a stop-loss at 72,000.
Bitcoin price continued to consolidate in the evening session as investors waited for the upcoming Federal Reserve decision. The BTC/USD pair has been stuck below the key resistance point at 70,000 in the past few days.
BTC/USD technical analysis
Bitcoin bottomed at $56,450 in May and has crawled back in the past few weeks. It rebounded and moved to the crucial resistance point at 70,000. The BTC/USD pair has moved above the 50-day and 25-day moving averages.
Most importantly, it has formed an inverse head and shoulders pattern and is now sitting near its neckline. The inverse H&S pattern is one of the most bullish signs in the market.
Also, the Awesome Oscillator has moved above the neutral point at zero. Therefore, the pair will likely have a bullish breakout in the next few days or weeks. If this happens, the initial level to watch will be last week’s high of 71,870. A break above that level will see it rise to the YTD high of 73,650.
GBP/USD Forex Signal: Ripe for a New Bearish Wave
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.2650.
Add a stop-loss at 1.2765.
Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.2735 and a take-profit at 1.2800.
Add a stop-loss at 1.2650.
Fed and BoE rates
The GBP/USD pair tilted upwards ahead of the upcoming UK jobs numbers, which will provide more information about the country’s wage growth. According to Bloomberg, analysts expect the data to show that the country’s unemployment rate remained at 4.3% in April while wage growth, including bonuses jumped by 5.7%.
A higher wage growth figure than expected will complicate the BoE’s rate cut outlook by signalling that the tight labor market was stirring inflation. That would make it difficult for the BoE to start easing interest rates, which sit at the highest level in 16 years.
The Bank of England is expected to start cutting rates as soon as in its July meeting since inflation has dropped recently. However, a rate cut may be complicated by the upcoming election in July where the Tories are expected to lose big.
There will be no other economic event in the UK on Tuesday. Therefore, focus among traders will be on the upcoming Federal Reserve decision. In it, the bank is not expected to slash interest rates.
Instead, the committee will provide more color on when the first cut will happen. This meeting will come at a time when the US is sending mixed signals. On the one hand, a report showed that the country’s manufacturing sector has moved into a deep contraction.
At the same time, the labor market is strong, with the economy adding over 272k jobs in May last year. Wage growth also continued accelerating, risking more inflation trends in the country.
GBP/USD technical analysis
The GBP/USD pair has rebounded from last week’s low of 1.2688. This rebound happened after the pair formed a morning star on the four-hour chart. It has moved above the lower side of the ascending channel shown in red.
The pair has also jumped above the 23.6% Fibonacci Retracement point level. However, the 25-period and 50-period moving averages are about to form a bearish crossover, which is a popular bearish sign.
Therefore, the pair will likely resume the bearish trend as sellers target last Friday’s low of 1.2688. A move below that level will point to more downside as sellers target the key support at 1.2650.
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Elliott Wave view on GBPUSD suggests that rally from 10.4.2023 low takes the form of an impulsive structure. Up from 10.4.2023 low, wave (1) ended at 1.2828. Correction in wave (2) unfolded as an expanded flat Elliott Wave structure. Down from wave (1), wave A ended at 1.2519 and wave B ended at 1.2894. Down from there, wave C subdivided into 5 waves. Wave ((i)) ended at 1.2538 and wave ((ii)) ended at 1.2709. The 60 minutes chart below shows the move lower in wave C from wave ((ii)) high.
Pair then extended lower in wave ((iii)) towards 1.2405 and rally in wave ((iv)) ended at 1.2485. Final leg wave ((v)) ended at 1.23. This completed wave C of (2) of the expanded flat. The pair has turned higher in wave (3), and the rally shows a promising 5 waves impulse in short term. Up from wave (2), wave (i) ended at 1.236 and wave (ii) ended at 1.233. Wave (iii) higher ended at 1.2465 and wave (iv) pullback ended at 1.242. Expect wave (v) of ((i)) to complete soon. Pair should then pullback in wave ((ii)) to correct cycle from 4.22.2024 low before it resumes higher. Near term, as far as pivot at 1.23 low stays intact, expect pullback to find support in 3, 7, 11 swing for further upside.
GBPUSD 60 Minutes Elliott Wave Chart
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