Figure 2: The GBPUSD on the daily chart
The key levels of support and resistances are as follows:
Resistance 1 is at the level of 1.2620-1.2650. It's a swing at the point J.
Resistance 2 is in the zone 1.2700 - 1.2750. At the same time, there is a moving average of SMA 100, which often reacts as a resistance.
Resistance 3 is in the range of 1.2780 - 1.2850. Here, Fibo 78.6% of the FH movement is. At the same time, there is the upper edge of the hidden gap from the candle formed on March 12, 2020.
Support 1 is located in the range of 1.2150 - 1.2230.
Support 2 is in the range around the level of 1.1980 - 1.2000. Here, there is the bottom edge of the hidden gap on the candle formed on March 26, 2020.
Support 3 is around 1.1400 - 1.1470.
Since the market as a whole is in a downtrend, it seems more appropriate to look for trades in the short direction near resistance levels, where it is then appropriate to wait for a confirmation.
Additionally, we present the overall sentiment of the market, which according to the report COT (Commitment of Traders), which is presented every Friday, brings the following information:
||Data as at 1/5/2020
||Data as at
|Data as at
|Data as at 10/4/2020
||Data as at
Last week, big speculators again reduced the overall position on the British pound. This is the eighth decline in a row, so bearish sentiment prevails on the pound. Speculators, on the other hand, strengthened their overall net position on the US dollar for the sixth week in a row, which, despite poor macroeconomic data in the US, confirms that the dollar serves as a strong reserve currency in times of crisis.
What awaits us this week?
As for Brexit, the next round of talks is scheduled for May 11, 2020, so preparations will take place this week.
The British PMI in services will be reported on Tuesday. The data of this indicator for the previous period reached a record low level of 12.3. The indicator is a very important barometer of further development, as services account for 80% of GDP in Britain. PMIs in construction will be reported on Wednesday. A meeting of the Bank of England is scheduled for Thursday, the bank is expected to keep the key interest rate at 0.10%.
From US data, Thursday will show how much the increase in applications for unemployment benefits continues. On Friday, information on NFP data, where 21 million jobs are expected to be lost, together with an expected 16% unemployment, will confirm the state of the labor market in the US.
In addition, further developments in the spread of coronavirus disease and the measures taken in this regard need to be monitored on an ongoing basis.
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