TA of the Day: Is GBP/USD’s Uptrend Taking a Temporary Pause?

GBP/USD The price is wandering around the 1.2900 level, unable to make a decision.

Sellers tried to take control, but they couldn’t quite get the job done, failing to close the day below the 1.2900 level. However, the bullish momentum seems a bit weak.

Wall Street banks are betting that the pound will continue its upward trajectory, driven by a resilient economy and hopes for political stability.

The pound has been the best performing currency in major developed markets this year, rising 1.7% Against the dollar to $1.29 and about 3% against the euro. 💪

The Labour Party’s election victory has increased optimism among investors, Analysts expect the pound to reach $1.35. By March of next year.

The basics look great, but what about the technical details?

you welcome in Teaching Assistant of the Day (TAOTD)! 👋

Here is the daily chart:

📈 Technical analysis of the GBP/USD pair on the daily chart

Using the technical analysis concepts we covered in our Forex course, let’s analyze the GBP/USD pair.

Simple Moving Averages (10, 50, 200):

• 10 period simple moving averageIt is located at the level of 1.29444. The current price is less This level indicates short-term bearish momentum. The slope is to the topindicating short-term strength recently.
• 50 period simple moving averageIt is located at the level of 1.27689. The price is: above This level indicates medium-term bullish momentum. The slope is to the topenhancing strength in the medium term.
• 200 period simple moving average: He was placed About 1.26191. The price is good. above This level indicates long-term bullish momentum. The slope is upward, indicating a continuation of the long-term uptrend.

If you are new to moving averages, read our Pipsology School lessons on moving average trading.

Relative position of moving averages:

• the 10 period simple moving average He is currently up 50 period simple moving averageindicating that the price has been rising faster in the short-term than in the medium-term. This is considered a bullish signal, indicating that the trend is likely to continue upward in the short-term.
• the 50 period simple moving average He is up 200 period simple moving averageindicating that the price has been rising faster in the medium term than in the long term. This is considered a bullish signal, indicating that the trend is likely to continue upward in the medium to long term.
• Price being above all of these simple moving averages indicates strong bullish momentum across different time frames.

Keltner Channel (KC)

• Keltner Channel:Upper band at 1.29838, middle band at 1.28634, lower band at 1.27431. The price is currently near the middle band, indicating that it is within the normal trading range.

If you are new to Keltner Channels, read our Pipsology School lessons on how to use Keltner Channels.

Relative Strength Index:

• Relative Strength Index (14)The current reading is 58.22. This is in the neutral to bullish territory, indicating that the market has a slight upward bias but is not overbought.

If you are new to the RSI, read our Pipsology School lessons on how to use the RSI.

🕵️ Key Notes

Price movement:

• UptrendThe price has been in an upward trend since early June, featuring higher highs and higher lows.
• Swipe back: The price recently reached a high of 1.3044 before pulling back slightly. It is currently trading at 1.29070, showing some consolidation after the recent bullish move, and is currently trying to find support.

Support and resistance levels:

• SupportsImmediate support is found at 1.28634 (Middle Keltner Band) and 1.27689 (50-period SMA).
• resistanceImmediate resistance is found at 1.29838 (upper Keltner Band) and 1.3044 (recent high).

Moving averages:

• The 10-period simple moving average is currently acting as immediate resistance, while the 50-period simple moving average is providing stronger medium-term support.

Relative Strength Index:

• The presence of the RSI in the neutral to bullish territory indicates a slight bullish bias, but there is room for both upward and downward movement.

Market structure, market composition:

• Recent swing highs and lowsThe price has been making higher highs and lows since May, confirming a bullish structure. The chart shows higher lows around 1.2700 in late June and higher highs above 1.3000 in mid-July, followed by a recent low around 1.2850.
• break the frameThere was a significant increase in the stock price above the previous swing high at 1.2893 In early March, indicating a continuation of the uptrend and strengthening of the bullish momentum.
• Change personality (chouch)ChoCh will be observed if the price drops below a recent higher swing low at 1.2299indicating a shift in the market structure from bullish to bearish.

🤔 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 1.28634 and shows signs of a bounce, such as a bullish candlestick pattern or positive divergence on the RSI. Additionally, a break above the resistance levels at 1.29838 and 1.3044 would indicate a continuation of the uptrend.
• Point of cancellationPlace a stop loss below the support level around 1.27689 to manage the risk.
• potential targetWe expect a move towards 1.3100 and above if the uptrend resumes.

Short entry

• Point of ConsiderationConsider entering a sell position if the price fails to break the resistance level at 1.29838 and shows signs of bearish momentum, such as a strong bearish candlestick pattern or the RSI moves below 50.
• Point of cancellationPlace a stop loss above the recent high at 1.3000 to manage risk. This level is crucial as a break above it would invalidate the bearish setup.
• potential targetThe initial target could be the support level at 1.28634. If the downward momentum continues, expect further decline towards 1.27689 or lower.

📝 TAOTD Summary

• directionThe long-term trend appears to be up with a series of higher highs and higher lows, but the short-term trend is showing some resistance around the 10-period simple moving average.
• Main levelsImmediate support at 1.28634 and resistance at 1.29838.
• PaidThe RSI is showing a slight bullish bias but indicates that there is room for both upside and downside movement.
• market structure, market compositionThe recent Dow Jones indicates a continuation of the uptrend, while monitoring the potential for price volatility is crucial to determining future price action. The next Dow Jones will occur if the price breaks above the recent swing high at 1.3044, indicating a continuation of the uptrend.
• Moving average analysisUpward slopes on the 10-period, 50-period, and 200-period simple moving averages indicate strong bullish momentum across different time frames.