GBPUSD: Double Top Still Possible Despite Brexit Optimism
The GBPUSD pair gapped higher on Monday on renewed Brexit optimism. The EU and the UK convened to reinitiate the negotiations, and that triggered a risk-on market move, with the GBP one of the main actors.
To step away from such events, we need to focus on the bigger timeframes. In this case, if we zoom out on the 4h timeframe, we see that the GBPUSD is still possible to form a double top around the 1.35 area.
Naturally, we would need some confirmation before selling, so a move lower must come first before expressing the bearishness. But how can that happen when all market participants know that the Fed will ease tomorrow, and a Brexit deal is very likely now?
The answer comes from a classic concept in financial markets – buy the rumor, sell the fact.
GBPUSD Technical Analysis
If we are to witness it, the GBPUSD pair should break the series of higher lows. More precisely, it should first move below 1.3130 before bears to open a short position. On such a move, the right area to place a stop loss order is above 1.35, while the take profit must follow the double top measured move. Effectively, it means a strong comeback for the USD in 2021, something that goes against the main narrative.