GBP/USD: recovery to previous highs 20 January 2021, 10:10

GBP/USD: recovery to previous highs

20 January 2021, 10:10

Scenario
Timeframe	Intraday
Recommendation	BUY STOP
Entry Point	1.3715
Take Profit	1.3800
Stop Loss	1.3650
Key Levels	1.3450, 1.3500, 1.3552, 1.3600, 1.3650, 1.3710, 1.3760, 1.3800

Alternative scenario
Recommendation	SELL STOP
Entry Point	1.3645
Take Profit	1.3552
Stop Loss	1.3710
Key Levels	1.3450, 1.3500, 1.3552, 1.3600, 1.3650, 1.3710, 1.3760, 1.3800

Current trend

GBP is strengthening against USD during today's Asian session, actively testing 1.3650 for a breakout. GBP is again taking advantage of the weakness of USD, which is prone to corrective sentiment after a short period of growth. Investors are not put off by the epidemiological situation in the country, which remains difficult despite a very active vaccination campaign.

Today the focus of the market participants will be on macroeconomic statistics from the UK on the dynamics of retail prices and the consumer inflation index in December. Despite the remaining restrictions in the country, the Consumer Price Index is expected to accelerate in December from +0.3% YoY to +0.5% YoY, which should provide significant support to the instrument.

Support and resistance

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is slightly narrowing from below, reflecting the ambiguous dynamics of trading in the short term. MACD has recovered growth, preserving a sell signal (located below the signal line). Stochastic is showing similar dynamics, reversing upwards after a short period of decline. At the moment, the indicator is located approximately in the center of its area.

It is necessary to wait for the market situation to clear up and the possible formation of a buy signal by all three considered indicators.

Resistance levels: 1.3650, 1.3710, 1.3760, 1.3800.

Support levels: 1.3600, 1.3552, 1.3500, 1.3450.

Trading tips

To open long positions, one can rely on the breakout of 1.3710. Take-profit – 1.3800. Stop-loss – 1.3650. Implementation time: 2-3 days.

The rebound from 1.3710 as from resistance with the subsequent breakdown of 1.3650 can become a signal to return to sales with target at 1.3552. Stop-loss – 1.3710.