GBP/USD: the pound remains under pressure
07 February 2019, 08:53
| Scenario | |
|---|---|
| Timeframe | Intraday |
| Recommendation | BUY STOP |
| Entry Point | 1.3005 |
| Take Profit | 1.3100, 1.3139 |
| Stop Loss | 1.2950, 1.2940 |
| Key Levels | 1.2796, 1.2838, 1.2882, 1.2917, 1.3000, 1.3054, 1.3100, 1.3139 |
| Alternative scenario | |
|---|---|
| Recommendation | SELL STOP |
| Entry Point | 1.2910 |
| Take Profit | 1.2838, 1.2800 |
| Stop Loss | 1.2960 |
| Key Levels | 1.2796, 1.2838, 1.2882, 1.2917, 1.3000, 1.3054, 1.3100, 1.3139 |
Current trend
GBP continues to weaken against USD, updating local lows of January 21. The negative dynamics is caused by the moderate growth of USD, as well as the continuing tension around the Brexit negotiations.
Investors are preparing for a meeting of Prime Minister Theresa May with officials in Brussels. British proposals on backstop will be considered but there are no guarantees of new concessions from EU. In case of failure of negotiations, the chances of a hard Brexit will rise, and GBP will be under pressure.
On Thursday, investors are awaiting the results of the Bank of England meeting but on the eve of Brexit, the regulator is unlikely to make significant changes in monetary policy. It is predicted that the rate will remain at the same level of 0.75%.
Support and resistance
On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing, reflecting the emergence of a steady downtrend in the short term. MACD is declining keeping a stable sell signal (located below the signal line). Stochastic, having reached its lows, reversed to the horizontal plane, indicating a strong oversold pound in the short and/or ultra-short term.
Current showings of the indicators do not contradict the further development of the "bearish" trend in the short term.
Resistance levels: 1.3000, 1.3054, 1.3100, 1.3139.
Support levels: 1.2917, 1.2882, 1.2838, 1.2796.
Trading tips
To open long positions, one can rely on the rebound from the support level of 1.2917 with the subsequent breakout of 1.3000. Take profit — 1.3100 or 1.3139. Stop loss — 1.2950 or 1.2940. Implementation time: 2-3 days.
A breakdown of 1.2917 may be a signal to further sales with target at 1.2838 or 1.2800. Stop loss — 1.2960. Implementation time: 1-2 days.
GBP continues to weaken against USD, updating local lows of January 21. The negative dynamics is caused by the moderate growth of USD, as well as the continuing tension around the Brexit negotiations.
Investors are preparing for a meeting of Prime Minister Theresa May with officials in Brussels. British proposals on backstop will be considered but there are no guarantees of new concessions from EU. In case of failure of negotiations, the chances of a hard Brexit will rise, and GBP will be under pressure.
On Thursday, investors are awaiting the results of the Bank of England meeting but on the eve of Brexit, the regulator is unlikely to make significant changes in monetary policy. It is predicted that the rate will remain at the same level of 0.75%.
Support and resistance
On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing, reflecting the emergence of a steady downtrend in the short term. MACD is declining keeping a stable sell signal (located below the signal line). Stochastic, having reached its lows, reversed to the horizontal plane, indicating a strong oversold pound in the short and/or ultra-short term.
Current showings of the indicators do not contradict the further development of the "bearish" trend in the short term.
Resistance levels: 1.3000, 1.3054, 1.3100, 1.3139.
Support levels: 1.2917, 1.2882, 1.2838, 1.2796.
Trading tips
To open long positions, one can rely on the rebound from the support level of 1.2917 with the subsequent breakout of 1.3000. Take profit — 1.3100 or 1.3139. Stop loss — 1.2950 or 1.2940. Implementation time: 2-3 days.
A breakdown of 1.2917 may be a signal to further sales with target at 1.2838 or 1.2800. Stop loss — 1.2960. Implementation time: 1-2 days.
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