GBP/USD Technical Analysis: May 22, 2018

The British pound slightly declined at the beginning of the Monday session as it reached the level of 1.34 before finding buyers. Since there are still signs of support, it looks like it supported the fight for buyers. Yet, there are some major concerns above.

Trading the British major currency pair slid down towards the psychological level of 1.34 before going up again. It has shown a significant amount of bullish pressure but there could also be signs of significant resistance in the previous uptrend line, established in the yellow ellipse on the chart. This gives a significant amount of resistance with a high probability of a rollover then we could look for the level 1.34 below, which was also supportive in the past. A breakdown below would allow the market for a decline up to the level of 1.33 and further to 1.30.

We should be cautious of any rally, at least not until a successful breakout to 1.3550. For now, we could reverse the whole situation completely, but I think there will also be a continuation of dollar strengthening in the short-term, which is likely to extend for the rest of the summer and continue its rally in the U.S. When a breakdown occurs below the uptrend line, this could become a problem for the British pound. Although, it may not necessarily be a problem as much as the strengthening of the U.S. dollar. I would look for some type of exhaustive candle near the area of 1.3475 to begin shorting this pair.

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