Despite the 0.98% increase shown by GBP/USD at the auction on October 19-23, further strengthening of the Pound against the US Dollar remains questionable. Why? We will discuss this in more detail in the technical part of this review. In the meantime, let’s touch on the COVID-19 issue and note the most important macroeconomic events that can have a significant impact on the price dynamics of the Pound/Dollar currency pair at the current five-day trading session.
In a number of European countries and in the UK, the situation with the spread of the COVID-19 pandemic remains extremely difficult. There is no doubt that there is a second wave of the Coronavirus epidemic. In Wales, United Kingdom, very strict restrictions have been imposed. Bars and restaurants are closed; as well as most of the shops. Residents are not allowed to leave their homes after 17:00 local time. Let me remind you that the UK holds the lead in Europe in terms of the death rate from COVID-19 which is a very sad indicator.
This week is expected to have extremely small volume of statistics from the UK, and the most important indicators will not be tackled at all. In this regard, the fundamental background for the GBP/USD pair will be determined by macroeconomic reports from the United States. First of all, it is worth highlighting the orders for durable goods as well as preliminary data on the GDP of the United States for the third quarter. Moving on to the GBP/USD price charts and taking into account the results of the past week, let’s start with the corresponding timeframe.
Weekly
Despite the growth shown, the last weekly candle formed a fairly long upper shadow and the closing price of the previous week’s trading was below the orange 200 exponential moving average and the red Tenkan line of the Ichimoku indicator. It is characteristic that in last week’s review, these two indicators were designated as targets for possible growth and were defined as potentially strong resistances. At the same time, the rebound from the maximum values of 1.3175 was so significant that the Pound’s bulls failed to close weekly trading above the important technical levels of 1.3047 and 1.3050.
After such long upper shadows, questions were brought up about the ability of the quote to continue growing. In our case, to continue the upward trend, it is necessary to update the previous highs at 1.3175 and pass the difficult technical level of 1.3200. If this is done, the next target for the Pound’s bulls will be a strong resistance zone of 1.3265-1.3282. However, the implementation of a bearish scenario also does not seem to be easy. To control the pair, players on the downside need to return the price not only to the psychological level of 1.3000, but also to go below 1.2900. However, even if these conditions are met, it is impossible to give an unambiguous answer about the bear market for the GBP/USD pair. In my personal opinion, the key support zone is 1.2811-1.2767. First, the previously broken resistance of 1.2811 passes here. Second, the 89 exponential moving average, the Kijun line of the Ichimoku indicator, and the 50 simple moving average are located slightly lower. The true breakdown of which signals the bearish nature of subsequent trades on the GBP/USD pair.
Daily
On the daily chart, the current situation looks more bearish. As you can see, the exit from the Ichimoku indicator cloud and the breakdown of the 1.3081 resistance level turned out to be false. The price returned to the limits of the daily cloud and under the mark of 1.3081. This factor signals the weakness of the bulls for this instrument, which most likely makes selling the main trading idea for the Pound-Dollar pair. However, there are two points to note here. The first is the Tenkan red line, which stopped Friday’s decline and could potentially return the pair to an upward trend. The second point is a likely pullback to the broken resistance line 1.3479-1.3063, which runs near the lower border of the cloud and together with it can provide strong support.
Trading recommendations for GBP / USD
Given the ambiguous technical picture and frequently changing market sentiment, effective positioning in both directions is possible. Sales should be considered after the rise in the price area of 1.3050-1.3090 and the appearance of bearish candle patterns there. It is better to look at purchases after short-term declines in the area of 1.3017-1.2967 and the appearance of bullish candlestick analysis models there.
The material has been provided by InstaForex Company – www.instaforex.com
Despite the 0.98% increase shown by GBP/USD at the auction on October 19-23, further strengthening of the Pound against the US Dollar remains questionable. Why? We will discuss this in more detail in the technical part of this review. In the meantime, let’s touch on the COVID-19 issue and note the most important macroeconomic events that can have a significant impact on the price dynamics of the Pound/Dollar currency pair at the current five-day trading session.
In a number of European countries and in the UK, the situation with the spread of the COVID-19 pandemic remains extremely difficult. There is no doubt that there is a second wave of the Coronavirus epidemic. In Wales, United Kingdom, very strict restrictions have been imposed. Bars and restaurants are closed; as well as most of the shops. Residents are not allowed to leave their homes after 17:00 local time. Let me remind you that the UK holds the lead in Europe in terms of the death rate from COVID-19 which is a very sad indicator.
This week is expected to have extremely small volume of statistics from the UK, and the most important indicators will not be tackled at all. In this regard, the fundamental background for the GBP/USD pair will be determined by macroeconomic reports from the United States. First of all, it is worth highlighting the orders for durable goods as well as preliminary data on the GDP of the United States for the third quarter. Moving on to the GBP/USD price charts and taking into account the results of the past week, let’s start with the corresponding timeframe.
Weekly
Despite the growth shown, the last weekly candle formed a fairly long upper shadow and the closing price of the previous week’s trading was below the orange 200 exponential moving average and the red Tenkan line of the Ichimoku indicator. It is characteristic that in last week’s review, these two indicators were designated as targets for possible growth and were defined as potentially strong resistances. At the same time, the rebound from the maximum values of 1.3175 was so significant that the Pound’s bulls failed to close weekly trading above the important technical levels of 1.3047 and 1.3050.
After such long upper shadows, questions were brought up about the ability of the quote to continue growing. In our case, to continue the upward trend, it is necessary to update the previous highs at 1.3175 and pass the difficult technical level of 1.3200. If this is done, the next target for the Pound’s bulls will be a strong resistance zone of 1.3265-1.3282. However, the implementation of a bearish scenario also does not seem to be easy. To control the pair, players on the downside need to return the price not only to the psychological level of 1.3000, but also to go below 1.2900. However, even if these conditions are met, it is impossible to give an unambiguous answer about the bear market for the GBP/USD pair. In my personal opinion, the key support zone is 1.2811-1.2767. First, the previously broken resistance of 1.2811 passes here. Second, the 89 exponential moving average, the Kijun line of the Ichimoku indicator, and the 50 simple moving average are located slightly lower. The true breakdown of which signals the bearish nature of subsequent trades on the GBP/USD pair.
Daily
On the daily chart, the current situation looks more bearish. As you can see, the exit from the Ichimoku indicator cloud and the breakdown of the 1.3081 resistance level turned out to be false. The price returned to the limits of the daily cloud and under the mark of 1.3081. This factor signals the weakness of the bulls for this instrument, which most likely makes selling the main trading idea for the Pound-Dollar pair. However, there are two points to note here. The first is the Tenkan red line, which stopped Friday’s decline and could potentially return the pair to an upward trend. The second point is a likely pullback to the broken resistance line 1.3479-1.3063, which runs near the lower border of the cloud and together with it can provide strong support.
Trading recommendations for GBP / USD
Given the ambiguous technical picture and frequently changing market sentiment, effective positioning in both directions is possible. Sales should be considered after the rise in the price area of 1.3050-1.3090 and the appearance of bearish candle patterns there. It is better to look at purchases after short-term declines in the area of 1.3017-1.2967 and the appearance of bullish candlestick analysis models there.
The material has been provided by InstaForex Company – www.instaforex.com
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