
GBPUSD contraction reached a dangerous degree as price closed in to lower line of the trend channel. A 3-month long, massive wedge formation, an 8-month long trend channel’s lower line met while RSI stuck between its own trend and oversold zone. This setup might end with a massive move.
General direction possibility is higher to the upside because of RSI, bullish wedge formation and the price is close to the lower line of the trend. But on the fundamental side, UK’s covid-19 situation is getting worse, no clean deal with Europe either. Bank of England takes its foot off just a little from the hawkish comments while FED is probably going for a faster tapering. The question is how much of this is already priced in. If the answer is most of it then a bullish attack is more probable, but if not, 1.30 support is not far away either.
Friday’s US CPI data and next week’s central bank madness might become the igniter of this possible move but as you all know very well, things rarely go according to plan in the FX markets.