This is a very interesting situation.
Hello, dear traders!!
Daily chart
On Monday, the GBP/USD was moving in a downward trend. The downward movement was not intensive enough. The red Tenkan-Sen line of the Ichimoku Cloud indicator and the strong psychological and technical mark of 1.3000 managed to refrain the price from falling further.
Demand for assets that offer the most protection, including the greenback, influenced the dynamics of the currency pair. Market participants are concerned over the second wave of the coronavirus pandemic. Apart from that, investors are worried about the inability of the Trump administration to agree with the Democrats from the House of Representatives on the approval of a new stimulus package as well as the upcoming US presidential elections. As for the coronavirus pandemic, the situation in the United States and in the United Kingdom is far from perfect. Against this background, the countries are implementing or are preparing to introduce new severe restrictions which will surely have an adverse impact on the economies of both countries. In addition, Brexit, namely the failure of the EU and the UK to agree on a trade agreement, continues to put the British pound under pressure. By the end of this month, the parties must decide whether it makes sense to extend negotiations or whether it is better for the UK to withdraw from the EU without any agreement, no-deal Brexit.
Let's turn to the technical analysis of the GBP/USD pair. At the moment this article was written, the quote fell to the 1.3000 mark. The price found support at this level. Currently, it is trying to recover its losses. During the trading session, bulls need to return the quote above yesterday's high of 1.3073 where the pair encountered a strong enough bearish resistance. At the same time, the best-case scenario would be if traders were able to close today's session above the falsely broken resistance at 1.3081. Bears need to remove the price from the Ichimoku Cloud indicator down. The lower border of the indicator is at 1.2979. Next, sellers should bring the price back under the broken resistance line of 1.3479-1.3063. There, the price might receive support and even reverse. In general, it is a very interesting situation.
H4 chart
This time frame clearly shows that the pound/dollar pair has already touched the level of 1.3000. The price is now trying to rebound up from the indicated mark. The 50-day moving average and the 89-day exponential moving average can provide additional support for the pair. Possibly, they have already been giving support for the instrument. Here is my trading plan. If the pair breaks through the level of 1.3000, the 50-day moving average and 89-day exponential moving average will consolidate lower. In case of a rebound to the region of 1.2995-1.3015, you may open short positions. Candlestick signals typical for the downward movement will give additional sell-signals. If there are bullish signals near the area of 1.2975-1.2950, where there is the 200-day exponential moving average and the broken resistance line of 1.3479-1.3063, you may open long positions. In both cases, I'd rather refrain from setting high targets but limit yourself to 30-40 pips of profit and then exit the market, since sentiment changes frequently. Finally, I'd like to remind you that the United States will publish its durable goods orders report today. Perhaps this statistics will make adjustments to the GBP/USD forecast and affect its price dynamics.
Have a nice trading day!
