Over the course of last week’s movement, the GBP/USD experienced a substantial downside move, losing more than 2%, or 295 pips.
Weekly gain/loss: -2.12%
Weekly closing price: 1.3824
On the weekly timeframe, this has placed the GBP/USD pair within close proximity to a weekly support band coming in at 1.3683. Therefore, make sure to keep an eyeball on this level during the week, traders.
The story on the daily timeframe shows that daily support at 1.3878, although held firm mid-week, eventually gave way (now acting resistance). This, in our technical view, has unlocked the door to a void as there’s little support on this scale stopping price action from extending losses this week until we collide with a daily broken Quasimodo line at 1.3616 (sited below the aforementioned weekly support).
Leaving the 1.40 handle unchallenged on Friday, the British pound came under significant pressure and aggressively engulfed the 1.39 handle. Influenced by weak UK trade figures and a strong US dollar on risk aversion, H4 price ended the week crossing swords with a H4 demand seen at 1.3756–1.3794.
Potential trading zones:
Given the unit mildly pared losses from the noted H4 demand going into the close, we know that active buyers are (or were) present. For that reason, selling based on the higher-timeframe structure may not be the best path to take right now.
Waiting for the H4 demand to be consumed and retested as a resistance area would, in our opinion, not only be a safer method of shorting, but it’d also confirm bearish strength on the bigger picture and open up downside to the 1.37 handle, which, as you can probably see, is shadowed closely by the aforementioned weekly support.
For us, a sell on a retest of 1.3756–1.3794 would be considered an intraday trade, as active buyers highly likely reside around the 1.37 handle/ weekly support.
Data points to consider: No high-impacting events on the docket today.
Areas worthy of attention:
Supports: 1.37 handle; 1.3756-1.3794; 1.3683; 1.3616.
Resistances: 1.3848; 1.3878; 1.40/39 handle.
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