Home ForexForecasts 3 High Potential Forex Setups: Key Trading Levels for GBP/USD, USD/CHF, EUR/GBP

3 High Potential Forex Setups: Key Trading Levels for GBP/USD, USD/CHF, EUR/GBP

by SuperiorInvest
  • Recent US economic data, particularly in the manufacturing and services sectors, has strengthened the US dollar.
  • This has created a bearish scenario for GBP/USD, with a key support zone at 1.2530 and the possibility of a drop below 1.25.
  • Meanwhile, USD/CHF has broken out of a bullish flag as EUR/GBP bounces off a strong support level ahead of 2023.
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In recent days, the macroeconomic calendar has been filled with data releases from the United States. Most of these readings exceeded forecasts, leading to continued strengthening of the .

In addition to the ISM and data, US labor market data, which is typically released on the first Friday of the month, also significantly exceeded expectations.

US labor market data

This backdrop provides comfort to the bank, allowing it to refrain from hastily initiating a turnaround and maintain current interest rate levels until the June meeting.

At the same time, the UK is expected to implement its first interest rate cut as early as May. This divergence has begun to put downward pressure on the {{2|British pound}.

In addition to the pound, a strengthening US dollar could also create trading opportunities in pairs such as.

Elsewhere, trading setups are also found on the pair. The analysis below looks at the key levels to consider when analyzing your trades.

In this context, let’s take a look at three interesting trading levels that we should pay attention to.

1. GBP/USD: Look to sell if the pair breaks the key support zone

has been moving sideways since the beginning of the month within a dynamic downward momentum, leading to a breakout of the bottom of the medium-term consolidation.

GBP/USD 5-hour chart

GBP/USD 5-hour chart

Sellers are currently testing the local demand zone located at the 1.2530 price zone, from where strong demand momentum had previously started.

Given the strength of the US dollar and the possible dovish signals for the British pound, the base case scenario will be a drop below 1.25 and a continuation of the move south at least in the vicinity of 1.24.

A possible shallow defense and bounce from the currently tested zone could be an interesting zone for those looking to come up short.

In this context, it is worth keeping an eye on a possible retest of the previously broken consolidation lower boundary around $1.26 per pound. A return to the sideways trend above 1.26 would nullify this scenario.

2. USD/CHF breaks the bullish flag

The technical situation of the USD/CHF currency pair corresponds to the strengthening of the US dollar.

Currently, we see a bullish breakout from the formation of the flag, indicating a continuation of the northward movement.

USD/CHF 5-hour chart

Because the next strong resistance falls only in the 0.89 region, buyers have relatively large room to develop a demand scenario.

A good line of defense in this case seems to be the local support level, which generated a dynamic rebound in demand in the area of ​​0.8570.

An advance and a return to the decline could reach the late December 2023 lows again.

3. EUR/GBP: Pound weakness could spur buying opportunities

The downtrend we have seen in the EUR/GBP currency pair has led to an attack on the strong support level formed in the second half of 2023.

Now, the potential weakness in the British pound, combined with the technical opportunity to defend the support area, should be an opportunity to go long the pair.

EUR/GBP price charts

The first area of ​​trouble for buyers is currently the resistance zone located at the price zone of 0.8590 and slightly above the offer zone of 0.8610.

On the other hand, the break of this important support will be an important sell signal, which could lead to a decline even to the area of ​​the August 2022 lows.

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Disclaimer: This article is written for informational purposes only; It does not constitute a solicitation, offer, advice or recommendation to invest as such and is not intended to encourage the purchase of assets in any way. I would like to remind you that any type of asset is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains in the hands of the investor.

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