The GBP/USD pair is currently at 1.3144 when this article was written on August 26. In the very long-term, the price is in a bearish trend. Actually, if we look at 2008, the prices during that year around 2.000 and even more now seem impossible.
Going forward in time, we can see that the GBP/USD has been oscillating between 1.1450 and 1.4365 since September 2016.
In this sideways movement, the price has been around 1.3300 four times, being this one the fifth. In three of these four times, the price went down relatively quickly after flirting with the 1.3300 – 1.3500 level.
Currently, the price is experiencing another small sideways movement between 1.2990 and 1.3240. According to the Bollinger Bands, volatility is at low levels that we have not seen since the end of January of this year. This fact suggests that a strong movement may be close; and if that it is true, which side should you bet on?
If you ask me, and this is of course an opinion and not investment advice, it is more likely that the GBP/USD will go down more often than up. One reason is that, as we have explained before, the price is at a resistance level. And another reason is that MACD has crossed to be bearish on August 10, and since then seems unable to reverse.
What could be the objective of this bearish movement?
The minimal objective would be 1.2800 or 1.2750 which coincides with the top of June 2020 and the low of March. That level would also be a 50 percent correction (Fibonacci level) of the rise from June until August. Lastly, depending on how much it takes, it also could coincide with the moving average of 30 weeks.
This article has been written before Jerome Powell’s speech at Jackson Hole; but aside from daily movements of speculator based on his declarations, we do not expect that this analysis will change. Central Bank’s declarations will talk us about the COVID-19 crisis and GDP decreases. But since it is something happening in all countries, we think the market trend will be stronger than the efforts of an individual central bank that, by the way, will likely try to be counterbalanced by the other central banks.
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