GBP/USD: GBP is consolidating 17 February 2021, 09:07

GBP/USD: GBP is consolidating

17 February 2021, 09:07

Scenario
Timeframe	Intraday
Recommendation	SELL STOP
Entry Point	1.3855
Take Profit	1.3760
Stop Loss	1.3920
Key Levels	1.3700, 1.3760, 1.3800, 1.3861, 1.3900, 1.3950, 1.4000, 1.4068

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.3905
Take Profit	1.4000
Stop Loss	1.3845
Key Levels	1.3700, 1.3760, 1.3800, 1.3861, 1.3900, 1.3950, 1.4000, 1.4068

Current trend

GBP declines slightly against USD this morning session, trading below the psychological level of 1.3900. The day before, the instrument failed to consolidate at new record highs, and by the end of the afternoon session, it retreated to the opening levels. The reason for the decline was the correctional sentiment in favor of USD, while the fundamental picture is changing slightly.

GBP is feeling strong support from the conclusion of a trade agreement between the UK and the EU, and is also growing with an eye on the imminent lifting of quarantine restrictions by the British authorities in March.

Today, British investors expect the publication of January statistics on consumer inflation and producer price index. It is projected that consumer inflation in the country will show further deceleration, which will put pressure on GBP.

Support and resistance

Bollinger Bands in D1 chart show active growth. The price range expands from above, freeing a path to new local highs for the "bulls". MACD indicator tries to reverse downwards and to form a new sell signal (the histogram has to consolidate below the signal line). Stochastic is showing similar dynamics, retreating from its highs, indicating strongly overbought GBP in the ultra-short term.

The appearance of a full-fledged downtrend is possible in the short and/or ultra-short term.

Resistance levels: 1.3900, 1.3950, 1.4000, 1.4068.

Support levels: 1.3861, 1.3800, 1.3760, 1.3700.

 

Trading tips

To open new short positions, one can rely on the breakdown of 1.3861. Take-profit – 1.3760. Stop-loss – 1.3920. Implementation time: 2-3 days.

A rebound from 1.3861 as from support followed by a breakout of 1.3900 may become a signal for new purchases with the target at 1.4000. Stop-loss – 1.3845.