Is the Rally Over? GBPUSD Peaking Is a Major Reversal Imminent?

8月22日

Is GBPUSD setting up for a massive reversal, or are we on the brink of one final explosive push above 1.31?


We've seen quite a rally this month with GBPUSD, as it cleanly broke through the 1.30 level this week, climbing above 1.31 yesterday and hitting a 2023 high, which is now acting as resistance.


So, what's next?


At 1.313, we've reached last year’s high, where we previously witnessed a massive 1100-pip drop down to 1.20 in just a few months. If you look at the daily chart below, you’ll notice a rising wedge pattern has formed over the past few months.





Is a SELL-OFF imminent? The current bullish move is highly overextended and extremely overbought on the higher timeframes. Zooming into the 4-hour charts, we can see clear signs of momentum slowing down as we approach this key resistance zone.


In the 4-hour chart below, the highlighted area shows how momentum is fading as we near the SELL Zone, with each new push higher being sharply sold off before one final surge into the resistance area.





This is a classic indication that a reversal is likely on the horizon. If you compare it to the 4-hour chart from last year’s sell-off, you’ll see the same pattern: a huge surge followed by a couple of brief pauses, then one last push into the resistance zone before selling off.





Given all this, the next likely move for this pair is to the downside over the coming days or weeks. We might see one final push above 1.31, but I expect the market to sell off toward the wedge trendline around 1.28. If that level breaks, a move down toward 1.25 could be on the cards.


This setup has a high probability, given the overextended upward move, extreme overbought conditions on the higher timeframes, and slowing momentum on the 4-hour charts—all occurring as we approach a significant Weekly SELL ZONE where we saw a 1100-pip move last year.


I’ll be looking to sell this pair on a move above 1.31 again or on the first 4-hour signal from my TRFX indicator.


Let me know what you think in the comments below :)