The pound is bullish.
Hello, dear traders!
At the end of trading last week, the pound/dollar currency pair rose, adding 1.70%. Thus, the assumptions of a week ago that the British pound will feel more confident in the foreign exchange market than the single European currency have been confirmed.
Last week, sterling received some support after it was announced that British Prime Minister Boris Johnson had left the intensive care unit. Yesterday, there were reports that Johnson was discharged from the hospital, where he spent a total of a week cycle of treatment from COVID-19.
As for the technical picture for the pound/dollar pair, we will start with the weekly chart.
Weekly
As you can see, the growth at the auction on April 6-10 was stopped by the pair’s attempts to break above the Kijun line and the lower border of the Ichimoku indicator cloud, as well as strong resistance from sellers at 1.2480. However, reports that Boris Johnson was discharged from St. Thomas’ hospital served to open trading with a slight gap up, and at the time of writing, the pound/dollar is trading near the important psychological and technical level of 1.2500.
If the bullish scenario continues, the pound/dollar pair will rush to the upper limit of the weekly Ichimoku cloud, which passes at 1.2668. By the way, the 50 simple moving average is also located here, so there is no doubt that the pair will meet strong resistance in this area. The next obstacle to a possible strengthening of the British currency will be the broken support level at 1.2724. If we take into account the strength and significance of the mark of 1.2700, the resistance can be considered the price area of 1.2700-1.2725.
The bearish scenario will get a chance to be implemented if the pair falls below the Tenkan line (1.2305), after which it will update the minimum values of the previous week and break through the support at 1.2165.
On the weekly timeframe, the situation is ambiguous, but, judging by the mood of market participants, there is more chance for the upward dynamics to continue.
Daily
However, it’s not today to talk about investor sentiment – Easter Monday, the market is thin and any surprises are possible. As you can see, at the moment of writing the review, the pair rested at the level of 61.8 on the grid of the Fibonacci tool, stretched for a fall of 1.3199-1.1411. In this regard, I would like to note that the pound likes and knows how to make deep corrective pullbacks, which are often limited to the level of 61.8 Fibo. Given this factor, it will be extremely important for the British currency bulls to finish today’s session above 1.2516, but this is not the end of the test for them.
As you can see, the used moving averages are located at the top, each of which can stop the rise and turn the quote in the south direction. In this scenario, I recommend that you take a closer look at the levels: 1.2580 (50 MA), 1.2630 (89 EMA) and 1.2715 (200 EMA). If reversal candlestick patterns of Japanese candles appear under the listed marks, this will be a signal to open sales. In the meantime, I consider the most likely attempts of the pound/dollar pair to continue to grow. This can be judged by the fact of ignoring Friday’s reversal candle model “Tombstone”.
If we consider purchases here and now, they are most relevant, in my opinion, after the pair’s decline to the area of 1.2485-1.2465. If bullish candlestick reversal signals appear in the selected zone on the H4 and H1 timeframes, we try to buy the pound. However, do not forget about the thin market and the high probability of multidirectional movements.
Good luck!
The material has been provided by InstaForex Company – www.instaforex.com
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