Technical indicators on GBPUSD chart signal rebound

Several technical indicators on the chart of the GBPUSD currency pair (the four-hour timeframe) point to an upcoming upward correction.

First, the price has declined to a support area (marked green on the chart). This level previously served both as a local high in early April and a local low in mid-May.

Second, during the recent downward movement, the price broke through another support level at 1.3400 without retesting it, which increases the chances of an upward correction.

Third, the GBPUSD pair has been declining within a parallel channel, and the price is now approaching its lower boundary, also signaling a potential rebound.

Moreover, there is another technical sign of a possible correction. A classic reversal pattern named “head and shoulders” formed above the 1.3400 level. Its lower boundary was successfully broken down. After such movements quotes typically come back to retest the bottom of this pattern.

Many technical factors are now supporting the idea of the GBPUSD pair's upward reversal, but fundamentals related to the dollar's further growth create certain risks. The stock market may be entering a long-awaited correction, which would increase capital inflows into the US dollar and other safe-haven assets and put additional pressure on the GBPUSD pair.

The overall recommendation is to buy GBPUSD.

Profit should be taken at the 1.3400 level. A Stop Loss could be set at 1.3000.

The volume of the opened position should be calculated in a way that the possible loss (protected by a Stop Loss order) was no more than 1% of your deposit. If the size of the deposit doesn't allow opening such a position, consider refraining from entering the market on this signal and wait for other low-risk trading opportunities.