The GBP/USD currency pair is currently in a state of consolidation, with bulls facing strong resistance overhead at $1.3637. This resistance level has been tested three times already, and a successful breakout could lead to powerful profits on the long side. However, there is another key resistance level not far above $1.3637 at $1.3666, which bulls would also have to overcome to make strong progress in a long trade. This "coiling" below $1.3637 is attracting the interest of more traders. The price action is showing higher lows since 4th May, but there is a clear line of resistance which is confluent with the round number at $1.3637 and then another one above that at $1.3666. The US Dollar is looking uncertain but potentially vulnerable, which solidifies the anticipation of a potentially significant bullish breakout beyond the $1.3637 area. The USA/Iran war and related tensions have been going on for several months, and a return to kinetic war could send the USD higher as it tends to get a boost as a safe haven in these circumstances. A strong bearish rejection of the $1.3637 area with a large candle showing some impulsive bearish momentum could be a good signal to go short, especially if that is accompanied by some news about the Iran conflict which points away from a peace agreement in the near term. The price should be able to fall all the way to $1.3580 without encountering any strong support. The best method to identify a classic "price action reversal" is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. The thing to watch here today is likely going to be how the price reacts when it reaches $1.3637. This will probably be today’s pivotal point. If it gets established above $1.3666 long trades will likely be good opportunities; if it rejects $1.3637 with a firmly bearish move, a short trade will be an option. It is a Monday today with zero high-impact economic data releases scheduled, so it might be a relatively slow day without a great deal of directional price movement.
