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Good day, dear traders!
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As a result of yesterday's growth, the GBP/USD currency pair managed to break through the resistance of sellers at 1.2590, as well as go up a strong 200 exponential moving average and end the Wednesday session at 1.2605. Support for the British currency was provided by the promise of the United Kingdom's Finance Minister to allocate 30 billion pounds to normalize unemployment, reduce taxes for the hotel business and home purchases. The UK Cabinet is also working to prevent the negative consequences caused by the COVID-19 outbreak. However, the risks of a second wave of pandemics remain, and in a number of European countries, quarantine measures are being tightened again and some restrictions are coming into force. The situation is ambiguous and it is too early to relax. The insidious pandemic has not yet been definitively defeated.
This morning, the pound/dollar pair continues to grow and aims to rise to a strong technical resistance zone of 1.2645-1.2687. In many ways, this is where the future direction of GBP/USD will be decided. At the same time, it is necessary to keep in mind the 1.2700 mark, which is also extremely important for market participants.
If the pair turns down and ends today's session below the 200 EMA and below 1.2590, the breakout of the 200 exponential and the resistance of 1.2590 will have to be recognized as false and prepare for a reversal of the quote in the south direction.
No macroeconomic reports are scheduled from the UK today. From the US data, it is worth paying attention to the initial applications for unemployment benefits, which will be published at 13:30 (London time) and may affect the price dynamics of the pound/dollar currency pair.
H1
Given the growth of recent days, as well as the market's desire to continue moving in the north direction today, the main trading idea for the pound/dollar pair is buying, which is better to plan after short-term pullbacks to the price zone of 1.2595-1.2565.
At the same time, it is impossible to exclude a change in market sentiment and a reversal of the pair to a decrease, which is signaled by characteristic candle signals on the hourly and (or) four-hour charts.
If the pair holds above the broken resistance of 1.2590, 200 EMA and the significant level of 1.2600, there will be even more chances to continue the bullish scenario. In the meantime, I built an ascending channel with parameters on the hourly chart: 1.2256-1.2461 (support line) and 1.2525 (resistance line).
At the end of the review, the pound/dollar is trading near the midline of this channel. In the case of a decline to the lower border of the channel, in the area of 1.2565-1.2250, and the appearance of reversal bullish models of Japanese candles, it is worth trying to buy the pound/dollar with the nearest goals near 1.2600. The price zone of 1.2645-1.2685 will become a more distant reference point for fixing long positions.
If the pair does not fall to the support line of the channel, but is fixed above its middle (dotted) line, then you can also try opening long positions on the pound on a pullback to it. In any case, I recommend waiting for confirmation signals and not setting large goals. It is necessary to keep in mind the frequent changes in market sentiment.
Good luck!
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