GBP/USD: Is the Bullish Impulse Over?

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The daily chart shows a significant bullish impulse that encountered strong resistance in the 1.3350 - 1.3400 area, where multiple supply levels and an important institutional selling zone are located. The bearish structure remains intact below this level, suggesting a potential decline towards the key support at 1.3100 - 1.3150. The short bias strengthens with the confirmation of resistance and the formation of a potential reversal.

COT Report (USD Index and GBP/USD)

USD Index: Non-commercial traders are slightly increasing long positions (+397) while reducing short positions (-128). This suggests a potential recovery of dollar strength, supporting a bearish move on GBP/USD.
GBP/USD: Non-commercials have significantly increased short positions (+6,426) and reduced long positions (-2,957), indicating a bearish sentiment. Commercials also show a slight increase in short positions (+5,070), confirming potential weakness in the pound.

Retail Sentiment

57% of retail traders are short on GBP/USD, with an average price of 1.2916, while 43% are long at 1.3343. This imbalance could indicate a market attempt to capture stops above recent highs before a reversal.

Seasonality

Historically, the month of May shows a negative performance for GBP/USD. The 5, 10, and 15-year seasonal data indicate a consistent decline during this period, supporting the hypothesis of bearish pressure.

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