20.04.202012:04 Forex Analysis & Reviews: Analysis of GBP / USD and forecast for April 20, 2020

Hello dear traders!

As noted in the previous EUR/USD article, last week, the main currencies traded in different directions against the US dollar. In particular, the GBP / USD pair rose slightly, but the question regarding the further direction of the quote remains open. We will discuss this in more detail in the technical part of the review.

In the meantime, here's a brief update on the ill-fated coronavirus, which continues its deadly march around the world. In the UK, the number of infected is already more than 121,000. Death toll is estimated at 16,000. Against this background, the world's leading central banks are taking all possible measures, such as providing cheap loans and liquidity. Specialists are also working non-stop in developing a vaccine against the new type of coronavirus. Thus, production of new antiviral drugs will begin, which has yet to be used for widespread testing.

In the US, virologists are working on developing a vaccine against COVID-19. President Trump is urging people to get tested for coronavirus.

Since the economic calendar is almost empty today, we will focus on the technical picture formed by the GBP / USD currency pair.

Weekly

Although the pound rose slightly against the dollar, the situation on the weekly schedule remains extremely uncertain. The last candle with a longer upper shadow and a small bull body indicates this. There are pros and cons in this situation.

The pros include the fact that on April 13-17, trading closed above the Kijun line of the Ichimoku indicator and at the resistance level of 1.2480. The rise of quotes to 1.2645 and the inability to stay at the achieved heights indicates the weakness of the bulls on the pound. They did not even manage to close the weekly trading within the Ichimoku cloud, which also does not contribute to the upward prospects of the British currency.

Now, to confirm the upward movement, players do not only need to update the previous highs at 1.2645, but also raise the price from the Ichimoku cloud. When fulfilling this mission, I foresee serious problems, since the 50 MA, which functions as a resistance, lies right above the upper border of the cloud. In addition, the 1.2660 mark, as has been repeatedly noted earlier, is strong enough to have a direct impact on the price and turn it downwards.

Meanwhile, bears need to push through the mark of 1.2305 where the Tenkan line passes, and then break through the support level of 1.2165. It is worth noting that the tasks of these opposing parties are not easy, and a serious driver may appear to solve them. UK's labor market data will be published tomorrow, which will likely be a catalyst for determining GBP / USD's price dynamics.

Daily

In this timeframe, we see that after declining to 1.3199-1.1411, the pound made a deep correction to the level of 61.8 Fibo and met resistance at 50 MA and 89 EMA. Until now, the pound still cannot pass these moving averages. However, even if it succeeds, there is still the 200 MA above, at 1.2705, which can "hedge" and turn the quote downwards.

Looking at the daily timeframe, the bearish scenario of this pair will happen if the price breaks and consolidates below 1.2400. The further targets of sellers may be 1.2305 and 1.2165.

For specific trading recommendations, I think that buying under 50 MA and 89 EMA, in the region of 1.2540-1.2620, is risky and inappropriate. As an option, you can open long positions when falling to the support area of 1.2400. However, with such positioning, it is better to enlist the support of the corresponding candle signals on the daily, 4-hour or hourly charts. The goals are small, ranging from 80-100 points.

Sales are still relevant even if the pair rises to the levels of 1.2535, 1.2620, 1.2665 and 1.2705. However, before opening sell positions, it is better to check the corresponding candlestick analysis models, which will indicate a subsequent decline in the exchange rate.

Good luck!