Good day, dear traders!
Following the results of yesterday's trading, the GBP/USD currency pair declined, ending trading at 1.2259. Thus, the British pound did not meet the high expectations placed on it, that is, growth expectations. The resistance of sellers in the area of 1.2350-1.2360 was too strong. We will analyze the technical picture of GBP/USD in more detail later, but for now, we will briefly talk about the events that took place yesterday, and what awaits the pound/dollar pair today.
In his speech yesterday, the Chairman of the Federal Reserve Bank of New York, John Williams, said that in the second half of this year, the US economy can begin an active recovery, but this will only happen if the COVID-19 peak is reached in May-June. In the meantime, significant uncertainty remains, and the US Central Bank is ready for several scenarios. Due to the coronavirus epidemic, the economic situation in the United States, according to Williams, continues to be extremely difficult. Let me remind you that in March of this year, US President Donald Trump signed a bill for an unprecedented amount of two trillion dollars to support the world's largest economy.
The US currency, in the context of the coronavirus epidemic, is still in high demand as a safe asset. The US Federal Reserve System (FRS) played a significant role in this, which established swap lines with all the world's major central banks.
Meanwhile, the trade conflict between Washington and Beijing has again escalated amid President Trump's accusations of the Chinese distribution of coronavirus and the threat of new sanctions against China. And then there is the situation with the national security law of Hong Kong, which the US President mercilessly criticized.
If we return to the analysis of the GBP/USD currency pair and look at today's economic calendar, we will see that at 13:30 (London time), a large block of macroeconomic statistics will be received from the US. Data on GDP for the first quarter, orders for durable goods, as well as the number of initial applications for unemployment benefits will be published. Forecasts for these and other events can be seen in the economic calendar.
Daily
As already mentioned at the beginning of the article, the currency pair pound/dollar failed to continue to strengthen and is back within the Ichimoku cloud and the 50 simple moving average. The bears even tried to bring the pair down from the cloud, but they could not do this due to the strong support that the pair found at the level of 1.2203, and bounced up from this mark.
At the moment of writing, the GBP/USD pair is trading with a slight decrease near the lower border of the daily cloud. To determine further price dynamics, the closing price of today's session will be very important. If trading closes below the lower border of the cloud (1.2237), and even more so below the Tenkan line, which runs at 1.2217, the position of players on the downside will significantly strengthen, which will allow them to push through the important technical level of 1.2200.
Hope for a return to growth will only appear if today's session ends above the upper border of the cloud. With this development, another test will likely take place to break through the strong resistance zone of 1.2350-1.2362. Only a break of 1.2362 and consolidation above will inspire the market with bullish sentiment and allow the pair to test the strength of the important and significant price zone of 1.2400-1.2420.
H1
On the hourly chart, the pair is trading at the bottom of the ascending channel, receiving support from the 200 exponential moving average. The nearest resistance of sellers is again the level of 1.2294, right at which 50 MA is located.
Trading recommendations for GBP/USD:
The current situation is extremely ambiguous, so let's consider both options. Purchases will become relevant if the quote returns above 50 MA, the level of 1.2294, and the middle dotted line of the channel. Opening long positions at more attractive prices is recommended to consider near 1.2217, where the support line of the ascending channel passes.
Sales will become relevant after the breakdown of the support zone of 1.2220-1.2200. If this happens, you can try to sell the pair on the pullback to the designated zone. Another option for opening short positions on the pound will be the appearance of reversal candle models in the area of 1.2290-1.2320. I consider it impractical and risky to open positions on GBP/USD right here and now. It is better to get confirmation signals and only then enter the market.
Good luck!
