Undoubtedly, today’s session was held under the sign of the Jackson Hole conference and Jerome Powell’s speech. The market was expecting to hear what monetary policy the FED would pursue, whether it would let inflation go and still keep interest rates low.

Details can be found here, I will only quote a passage: “Powell has confirmed earlier speculation about changing the perception of the inflation target. The Fed will target average inflation and look more to the labor market. The Fed will put employment before inflationary issues. However, the Fed is not limited in its specific method of achieving average inflation of 2%. Nor does it indicate the period from which this average inflation would come…”.

Let’s take a look at the chart and analyze what might happen in the near future.

Cable GBP/USD
GBPUSD Daily – the strong upward trend has continued since the second half of March this year

The Daily chart shows a strong upward trend, with about 100p missing from the nearest supply zone, which starts at 1.3325.

In the four-hour chart (below), the situation looks a little more interesting, the last candle in the chart was formed during J.Powell’s speech and took the shape of a “spool”. – indicating the absence of a decision on which direction the market should go. It is also a mother candle creating an outside bar formation.

GBPUSD -British pound
GBPUSD H4 – outside bar was created by candle 12:00-16:00 GMT+2, during this time J.Powell’s conference was in progress

Tomorrow (28.08), Jackson Hole will present Andrew Bailey speech, who has replaced Mark Carney as head of the Bank of England. It seems that after his speech, the British pound may take a more decisive direction. What direction?

Well, looking at the chart from a purely technical point of view – overcoming one of the limits of an outside bar can be a signal to take a position in the direction of the formation.

The candle “mother” of the formation generated a maximum on the MACD and a bearish divergence was created. If consecutive H4 candles are accompanied by a decreasing MACD, there is a good chance to break down.


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