GBPUSD Ready to Pop as E.U. Summit Enters Straight Line
The much-awaited E.U. Summit enters straight line, and the GBPUSD moves directionless. It popped at the start of the Brussels reunion above 1.30, only to give back all the gains and fall to 1.29 again.
The price action mentioned above pretty much sums up what happened on the GBPUSD pair in the last week or so. But now that we come close to the Brexit deadline, the GBPUSD sets up for a possible steady break towards 1.34.
Indecision So Far at the E.U. Summit
The E.U. Summit in Brussel has two main topics on its agenda – Brexit and coronavirus. On the coronavirus front, both the E.U. and the U.K. face a second wave of infections much larger than the first one.
On the Brexit front, the negotiations continue with both parties willing to make some sort of sacrifices to get things done. With the first day of the Summit already behind us, the E.U. sees no breakthrough but promises more talks. On the other hand, the U.K. delegation was rattled by uninspiring language.
But this is what surfaces or leaks from the ongoing discussions. What is sure is that the talks will not end today, and we will hear more of Brexit in the days/weeks to come.
GBPUD Technical Analysis
For the GBPUSD, the 4h chart shows the pair sitting at dynamic support given by the projected neckline of a head and shoulders pattern. At this point, it offers a risk-reward ratio bigger than 1.2 to the aggressive bulls.
The right setup for bulls needs an invalidation or stop-loss at the lowest point in the head formation. Also, if the entry is at market, the risk-reward ratio is far better than if waiting for the price to reach the neckline.
Because of the distance the market must travel, do not expect it to do so in a day or two. Instead, bulls should take this step by step and trail the stop as the market advances.