Technical analysis as at January 12, 2020
From the weekly chart, see Figure 1, we can see that the price of the GBPUSD is now moving in the range between 1.35 and 1.30 and it is possible that the price will remain in this range until the end of January. For the last two weeks, the price has moved in a weekly range of approximately 200 pips. The price closed at 1.3055 last week.
Figure 1: GBPUSD on weekly chart
On the daily chart, see Figure 2, we can see that the last candlesticks were bearish. But more important is that the price is moving in an upward trend. This is confirmed by the fact that it created a higher high (point D) and a higher low (point E), and also the crossing of the EMA 50 (orange line) above the SMA 100 (blue line) at point F confirms the increasing trend. At point G we have another higher high. At point H, the previous level of resistance was broken when the price had previously consolidated in a side movement for six weeks.
The price is also moving in the growing channel, which is now defined by the EL support and GI resistance trend lines. The price has now reached the support line, which is also near a moving average EMA 50, which often acts as a support as well.
Figure 2: GBPUSD on daily chart
From the point of view of this technical analysis, trades in the long direction would be preferred. The ideal scenario now is to wait for a response to the support line at point L. If a strong bullish candlestick is created here in the lower H4 timeframe (for example, a bullish engulfing candlestick pattern), then this could be a signal to buy. If, on the other hand, the trend line breaks down, then another possible entry for long would be at the first level of support.
is at a level around 1.3260 - 1.3280.
is in the broad band 1.3330 - 1.3510. The level was tested and then the price bounced back down.
is at the level of 1.3700 - 1.3750.
is now in the zone 1.2940 - 1.2900.
is located in the band 1.2780 - 1.2820.
is in the range around 1.2520 - 1.2570. This level is a break of previous resistance.
In addition, we present the overall sentiment of the market, which according to the COT (Commitment of Traders) report, which is presented every Friday, shows that large speculators have been increasing their long positions for several weeks, which means they expect the GBPUSD to appreciate.