GBPUSD could be in for a reversal, as a double bottom pattern formed on its 1-hour forex chart. 

This could be a sign that the recent downtrend is already over as soon as price breaks past the neckline of the formation around the 1.5000 major psychological resistance.

Stochastic seems to be indicating that pound bulls are still gathering strength for an upside breakout, as the indicator is nearing the oversold area. A break above the 1.5000 mark could lead to a move up to the previous spike at the 1.5200 area or higher to 1.5300.

On the other hand, if the 1.5000 major psychological resistance continues to hold as strong support, GBPUSD could make its way back down to the previous lows at 1.4700. A break below this support area could mean more losses for the pair while another bounce could mark the start of range-bound price action.

There are no top-tier catalysts that might trigger a strong breakout or a sustained trend in either direction this week, as the major events from both the US and the UK have already played out last week. The FOMC revealed that they’re considering policy tightening but are in no rush to hike rates in June while the BOE minutes reflected a bit of caution among policymakers.

With that, the path of least resistance is still to the downside, although profit-taking towards the end of the month and quarter might lead to more upside. Bear in mind that price also broke above the exponential moving averages on its 1-hour time frame, supporting the idea that further gains are likely. In addition, the short-term EMA just crossed above the longer-term EMA, suggesting that an uptrend may be taking hold for now.

By Kate Curtis from Trader’s Way