GBP/USD: GBP retreats from local highs 26 January 2021, 10:24

 

GBP/USD: GBP retreats from local highs

26 January 2021, 10:24

Scenario
Timeframe	Intraday
Recommendation	SELL STOP
Entry Point	1.3595
Take Profit	1.3500
Stop Loss	1.3650
Key Levels	1.3450, 1.3500, 1.3552, 1.3600, 1.3700, 1.3760, 1.3834, 1.3900

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.3705
Take Profit	1.3834
Stop Loss	1.3630
Key Levels	1.3450, 1.3500, 1.3552, 1.3600, 1.3700, 1.3760, 1.3834, 1.3900

Current trend

GBP declines against USD in today's Asian session, testing the level of 1.3650 for a breakdown. The pressure on the position of the instrument remains against the background of a difficult epidemiological situation in the country, which has not yet been stabilized by the vaccination campaign. Against this background, investors are discussing possible actions by the Bank of England, aimed at further supporting the national economy. Negative rates are also discussed, but analysts agree that this will be one of the "extreme" measures and nothing of the kind should be expected in the near future.

On Tuesday, traders are focused on the UK labor market report for November and December. It is expected that the country's unemployment rate will continue to rise, which may be partially offset by an increase in average earnings.

Support and resistance

On the D1 chart Bollinger Bands are trying to reverse horizontally. The price range is slightly narrowing from below, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down having formed a new sell signal (located below the signal line). Stochastic, having rebounded from the level of "80", demonstrates a confident decline, signaling in favor of the development of "bearish" dynamics in the ultra-short term.

One should keep existing short positions in the short and/or ultra-short term.

Resistance levels: 1.3700, 1.3760, 1.3834, 1.3900.

Support levels: 1.3600, 1.3552, 1.3500, 1.3450.

Trading tips

To open short positions, one can rely on the breakdown of 1.3600. Take-profit – 1.3500. Stop-loss – 1.3650. Implementation time: 2-3 days.

The return of the "bullish" trend to the market with the breakout of 1.3700 may become a signal for purchases with the target of 1.3834. Stop-loss – 1.3630.