Technical Analytics Report

GBP/USD Technical Analysis Report 18 Jan 2021

 

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

December’s 2.5 percent extension elevated GBP/USD to multi-month highs and stirred trendline resistance (2.1161).

January, off fresh highs, is currently south by 0.6 percent.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Despite renewing 2021 highs at 1.3711 Thursday, ahead of resistance at 1.3755, GBP/USD fell sharply on Friday and settled at session lows.

The pair has favoured an upside bias since early 2020, therefore last Monday’s swing low at 1.3450 could be challenged this week, though follow-through action is possibly bound for support at 1.3176.

The RSI indicator has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region.

H4 timeframe:

Resistance at 1.3711—and associated Fib ext. levels—proved its worth once more on Friday; sellers nosedived from the said area and invaded demand at 1.3576/1.3607.

Giving up at 1.3576/1.3607 throws light on additional demand at 1.3401/1.3446 (and associated Fibs).

H1 timeframe:

Alongside H4 demand at 1.3576/1.3607, the 100-period simple moving average and 1.36 level also caved on Friday, with the latter serving as resistance as we spun into US trading.

The expectation, therefore, is for a possible dip into 1.3550 support on the H1 chart, with a break taking aim at 1.35.

Out of the RSI indicator, Friday ended in the shape of bullish hidden divergence—price formed a higher high while the indicator chalked up a lower low—from oversold space.

Observed levels:

Long term:

Despite scope to travel north on the monthly timeframe, a retest at the recently breached trendline resistance could be ahead. Interestingly, daily support at 1.3176 is arranged just south of the monthly trendline.

Short term:

Buyers failing to accept H4 demand at 1.3576/1.3607 highlights the possibility of a return to H4 demand at 1.3401/1.3446 this week.

A similar picture is seen on the H1 chart, particularly after retesting the lower side of 1.36, with 1.3550 likely to be initially targeted.


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