What is needed to open long positions on GBP/USD:
In the morning forecast, I turned your attention to 1.3310 and recommended opening long deals on GBP/USD upon a formation of a fake breakout. That is what actually has happened. Let's scrutinize a 5-minue chart and discuss what is going on. You can see clearly on the chart that the bears failed to break below the level of 1.3310 in the first half of the trading day. Afterwards, the bulls have entered the market. The eurozone's services PMI contracted to a lesser extent than economists had projected. As a result, GBP/USD rose to the resistance level of 1.3378. In the morning forecast, I recommended selling the currency pair from 1.3378 during the first test bearing in mind a 27-pips correction. The second test of this level subdued sellers' zeal. So, the bulls defended 1.3378 at the third attempt.
In the second half of the day, the bulls will focus on this level. Its test from top to bottom and a formation of a fake breakout are expected to give a new signal to buy the sterling, reckoning a further uptrend in the area of 1.3467 where I recommend taking profit. The level of 1.3523 is seen as a more distant target. Alternatively, in case the pound declines to support at 1.3467 amid the lack of the bulls' activity, it would be better to cancel long deals until the morning support is tested. Moving averages are passing there, playing on the buyers' side. You could buy straight away from 1.3310 during a bounce bearing in mind a 20-30 pips correction intraday.
What is needed to open short deals on GBP/USD:
Meanwhile, the bears are struggling to regain control over 1.3378 which they lost in the first half of the day amid expectations for the last-minute Brexit deal. The UK services PMI declined slightly that gives hope that the British economy will cope better with the second COVID-19 wave. Now the primary task for the bears is to return GBP/USD to the level below 1.3378 and test it from bottom to top. This creates a rather nice point for entering short positions which will be able to push the sterling to the morning support of 1.3310 where I recommend profit taking. Only a breakout of 1.3310 with fixation below this level will reinforce confidence of the GBP sellers that will open the door to lows of 1.3237 and 1.3168. In case the sellers lack activity at near 1.3378 in the second half of the day, it would be better to cancel short deals until a fresh high of 1.3467. It is possible to sell from this level during a bounce bearing in mind a 20-30 pips intraday correction.
Signals of technical indicators
The pair is trading below 30- and 50-period moving averages. It indicates a robust effort of the GBP buyers to push the pair up.
Remark. The author is analyzing a period and prices of moving averages on the 1-hour chart. So, it differs from the common definition of classic daily moving averages on the daily chart.
In case GBP/USD trades lower, a median indicator's line of 1.3315 will serve as support.
Definitions of technical indicators
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