TA of the Day: Is GBP/USD’s Bull Run Sustainable? Watch These Critical Levels!

By Investor Empires On Aug 22, 2024

the GBP/USD The pound has risen sharply over the past two weeks, but its rise has slowed slightly to near last year’s high of 1.3143.

Despite the pair’s decline, the price action indicates a very strong bullish sentiment in GBP/USD pair.

However, this optimism may be short-lived, as the less tolerant (or even hardline) tone of Fed Chair Jerome Powell’s Upcoming Speech It could be the spark that ignites a major revolution!

Currency traders will be holding their breath as J.P. Bowe prepares to speak at Jackson Hole Economic Symposium Friday at 10am ET.

This highly anticipated event could be a turning point in shaping expectations for future interest rate cuts, ultimately impacting the trajectory of the US dollar!

The theme of this year’s symposium is “Reassessing the effectiveness and transmission of monetary policy“Sounds exciting. 😴

While no new interest rates or policies will be announced, Powell’s words will be scrutinized for any hints about the Fed’s future plans.

Later on Friday, Bank of England Governor Andrew Bailey He will also take the stage, but his speech may struggle to grab the spotlight.

It’s like being the opening act after a superstar performance. Following Powell’s highly anticipated speech is like Ed Sheeran trying to wow the crowd. after Taylor Swift has already wowed everyone.

As a result, Billy’s message may not receive the same level of attention.

With this potential event in mind, let’s see what the technical indicators are saying about the GBP/USD currency pair.

Welcome to Teaching Assistant of the Day (TAOTD)! 👋

Let’s focus on the current technical setup of GBP/USD Based on the 4-hour chart:

📈 Technical analysis of the GBP/USD pair on the 4-hour chart

Let’s analyze GBP/USD Using the basic technical analysis concepts we covered in our Forex course.

Exponential Moving Averages (EMAs):

10 period exponential moving averageIt is located at the level of 1.3077. The current price is only above This level, indicating the continuation of the bullish momentum in the short term. To the top The slope confirms recent strong buying pressure.
20 period exponential moving averageLocated at 1.3042. The price is good. above This level, which reinforces the ongoing uptrend in the short term. To the top The slope of the 20-period exponential moving average indicates that the upward momentum is sustainable.
50 period exponential moving average:Centered around 1.2957 level. The price is still above This level confirms the medium-term bullish momentum. To the top The slope indicates that the medium-term trend is still in favor of the bulls.
200 period exponential moving average:Located at 1.2854. The price is very high. above This level, highlighting the strong long-term bullish momentum. To the top The slope of the 200-period exponential moving average indicates that the long-term trend is still intact.

Relative position of moving averages:

The 10-period exponential moving average is currently above The 20-period, 50-period, and 200-period exponential moving averages indicate a strong short-term uptrend within an overall bullish environment.
The 20-period exponential moving average is also above The 50 and 200 period exponential moving averages are in line, confirming continued upward pressure across the everyone time frame.

Moving Average Convergence/Divergence (MACD):

MACD line is slightly down above Signal line.
Both lines are above zero.
This indicates that the upward momentum is still there, but it may be weakening a bit.
The stability of the histogram also indicates that the current uptrend may be losing strength.

🕵️ Key Notes

Price action:

Let’s analyze the recent price action of GBP/USD based on the chart:

Strong uptrend: The most notable feature is the strong upward trend.
Big drop: A recent important low was formed in early August at 1.2670. This level serves as the starting point for the current rally.
Initial height: From the major bottom, there was a strong initial rally to around 1.2850 in mid-August.
Minor correction: After the initial rise, there was a slight correction to around 1.2750, which formed a higher low compared to the main bottom.
Second height: The pair then rose again, breaking above the previous swing high and reaching around 1.2900.
Unification: A brief period of consolidation occurred around 1.2850-1.2900, forming a narrow range.
Breakout and Big Rise: The most recent and important change is the strong upward move in which we broke the 1.3000 level and reached a new high.
Sharp upward trend: The uptrend angle became steeper with each swing, indicating increasing bullish momentum.
Minimum declines: The pullbacks between the highs were relatively shallow, especially in the last swing, indicating continued buying pressure.
Swing length: The length of the bullish swings has increased, with the recent swings being the largest.
sharp rise: We have seen a sharp and almost vertical rise in recent days, with the price moving from around 1.2700 to above 1.3000.
Breakout above resistance: The pair broke through important resistance levels, including the psychological level of 1.3000 and the previous high around 1.3050.
Acceleration trend: The uptrend has accelerated significantly in the last few candles, indicating increasing bullish momentum.
Last height: The pair recently hit a new high at around 1.3130.
Current decline: The last candle shows a slight pullback from the new high, indicating some profit taking or short-term consolidation.

Main levels:

1.3000:An important psychological level, now working as a support.
1.3100The coming psychological resistance.

Support and resistance levels:

SupportsImmediate support is found at the 10-period EMA (1.3077) and the 20-period EMA (1.3042).
resistancePsychological resistance at 1.3100.

🤔 Possible trade scenarios

He is GBP/USD Buy or Sell?

The following trading scenarios are provided for educational purposes only. Since they do not include full risk management practices, they are not intended to serve as actual trading recommendations, but rather as food for thought to help you generate your own trading idea.

Long bias:

Point of ConsiderationConsider entering a long position if the price finds support near the 10-period EMA at 1.3077 or on a pullback to the 20-period EMA around 1.3042. A break above the 1.3100 level could also provide a buying opportunity.
Point of cancellationConsider setting a stop loss below the 20-period EMA at around 1.3030 to manage risk.
potential targetWe expect a move towards 1.3150 or higher if the uptrend continues.

RationaleStrong bullish momentum, supported by the EMA structure, suggests further upside potential. However, caution is advised due to the proximity of resistance and slight weakness in MACD momentum.

Short bias:

Point of ConsiderationConsider entering a sell position if the price shows signs of rejection around the resistance level of 1.3100 or if there is a bearish crossover in the MACD indicator.
Point of cancellationConsider setting a stop loss. above Recent high around 1.31200 for risk management.
potential targetThe initial target could be the 20-period EMA at 1.3042, with further downside potential towards the 50-period EMA at 1.29576.

RationaleA slight weakness in the MACD momentum and possible resistance at 1.3100 indicate a potential short-term pullback or consolidation. A rejection at 1.3100 could signal a short-term reversal.

📝 TAOTD Summary

Current positionThe price is in a strong uptrend, testing the psychological resistance at 1.31000. The bullish momentum is supported by the position above all major exponential moving averages, although the MACD indicator indicates caution as the momentum may weaken.
directionThe overall trend is bullish, with the price above the 200-period EMA, confirming long-term strength. The short- and medium-term trends are also bullish.
Last LevelsNear-term support is at 1.3077 (10-period EMA) and 1.3042 (20-period EMA), with resistance at 1.31000.
batchThe MACD indicator indicates that the bullish momentum continues, although it may weaken slightly, indicating a possible short-term pullback.

This market structure indicates that the GBP/USD pair is in a bearish state. Strong upward phase.

The alignment of all technical factors (price action, moving averages, momentum indicators) supports this bullish view.

The price is above all major EMAs, and the price itself has been recording a series of higher highs and higher lows.

The lack of major pullbacks and recent acceleration in the uptrend suggest that Buyers have constant control.MACD confirms bullish momentum.

While the current trend is clearly bullish, Slope The recent move suggests that a pullback or consolidation may occur soon.

You should watch how the price reacts to the psychological resistance level of 1.3100 above, and the psychological support level of 1.3000 below.

Restore price and Holds 1.3100 A break below 1.3000 could lead to further gains, while a break below 1.3000 could signal the start of a more significant correction.

🔑 The key will be whether the GBP/USD pair is able to Maintaining the higher lows pattern in any pullbackand whether it can Break above recent high to continue uptrend.

Be wary of potential volatility caused by the Jackson Hole news and watch for signs of exhaustion or potential reversal patterns, given the extent of the recent rally.