GBPUSD appears to have finally broke out of its consolidation pattern on the 4-hour chart. Price surged past the resistance of its descending triangle, indicating its intention to go for more gains.

The chart pattern is approximately 900 pips tall so the resulting breakout could be of the same height. However, the 100 SMA is still below the longer-term 200 SMA so the path of least resistance is to the downside. Stochastic is also indicating overbought conditions, which means that buyers are starting to feel exhausted.

Still, the gap between the moving averages has narrowed to show a potential upside crossover that might draw more buyers in. A quick pullback to the broken triangle resistance at 1.3150-1.3200 could take place before the pair heads any further north.

The pound took hits due to downgraded growth forecasts released during the Autumn Forecast Statement and increased its borrowing estimates for the next few years to offset the impact of Brexit. However, the currency stabilized as Hammond reassured that support will be provided to help the economy weather any uncertainties.

Meanwhile, the dollar was weaker across the board during the release of the FOMC minutes as it confirmed that policymakers were increasingly concerned about weak inflation. Many participants worried that inflation would run below target for much longer than expected, hinting at a less aggressive pace of tightening for 2018.

US banks are closed for the Thanksgiving holidays so lower liquidity and higher volatility for major pairs are eyed. The UK is scheduled to release its second estimate GDP for Q3 but no revisions to the earlier 0.4% estimate are expected.

5 thoughts on “GBPUSD Triangle Breakout (Nov 23, 2017)”

  1. Ryan Gandalf van Jaarsveld says:

    Thanks Kate!! Looking at Dxy, the daily chart has finally made a lower low after the double top indicating that we are heading lower. The daily stoch on Dxy is heading down to oversold, similar to Cable though there is no doubt that when price pulls back for the lower high bears are going to sell. Beast is currently at support and Cable at resistance so one of them is going to break out – my bias is looking for a move higher in Beast so I am also thinking Cable higher… Fundamentally, after FOMC minutes, I see good reason for continued USD weakness until we see better inflation data or FOMC members communicate otherwise. December is all but priced in so any further Dollar strength would be the result of the path in 2018 so all eyes on inflation-related data and fed speeches as we head into December… At least, that’s how I see it… Let’s see how she runs though I am looking for opportunities to long both. Hopefully, Brexit doesn’t rain on the parade.

  2. Bruk Teffera says:

    I get its broken out of the triangle, I get DXY [ 12% GBP , 57% Euro, 14% JPY ] is under pressure but can you give me one real good reason to buy either Cable or Dollar, fundamentally speaking I mean. I believe Cable won’t make it past 1.3400. but this is clearly my opinion. I’ll be looking to sell around there. only a clear daily close above 1.3400 would make me stay out of cable shorts but wont be looking to buy it any time soon except for daily scalps.

    1. Ryan Gandalf van Jaarsveld says:

      Bruk you make a good point, there are probably better trades out there… Need to pay attention to price action as we head into the second week of December… COT doesn’t show any significant change to bulls, slight decrease to bears… Either you are looking for a breakout and trading the bullish trend until it ends or you are selling once we get a reversal at the top of the range and trading it all the way back down to 1.3050

    2. Ryan Gandalf van Jaarsveld says:

      One correction to my post – COT data for last week is not out yet… Probably out tomorrow due to Thanksgiving, right?

  3. Bruk Teffera says:

    Yes Ryan, COT still not out. . Im Looking for an impulsive move down proportional to the first impulse leg which should take pound down around 1.27 before downside correction ends. then i\ll be looking for another move up

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