Investors are beginning to be wary of early signals of price trend changes that have been displayed on the chart of the GBP/USD currency pair earlier this week.
Expectations for the US dollar to continue strengthening following the reaction at the Jackson Hole symposium event last week, were misplaced.
The failure of the US dollar to strengthen has given room for the Pound to breathe a little again, but the market remains cautious awaiting important economic data to be published this week, especially the US NFP employment report.
Examining the GBP/USD chart, the price continued its plunge last Friday, instead it only leveled below the 1.26000 zone throughout Monday yesterday.
A flat price movement in the range of 30-40 pips around the zone indicates slow movement for the chart.
However, investors began to assess the signal of a change in the bullish trend when the price movement towards the end of the New York session saw the price rise above the Moving Average 50 (MA50) barrier level on the 1-hour time frame.
Continuing trading in the Asian session this morning (Tuesday), prices have continued to rise, albeit slowly, above the 1.26000 level that bucked last week's trend.
If the US dollar significantly weakens, the price could climb higher to re-reach the focus level at 1.27000.
A higher move could prompt the price to retest the resistance zone at 1.28000 which is still immune to breaking after being tested a few weeks ago.
Meanwhile, for the expectation of a further decline in price, the price movement that falls back below 1.26000 indicates a failed bullish pattern.
The price will drop lower after being below the MA50 level again and is likely to drop to the 1.25000 zone after also passing the lowest level reached last Friday.
