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Good day, dear traders!
Yesterday's trading ended for the bulls on the pound with a loss of initiative, and in fact, a fiasco. Another surge in the second wave of COVID-19, the US Supreme court's review of US President Donald Trump's financial transactions, discouraged risk appetite and caused demand for a protective asset, which is the US dollar.
No macroeconomic data will be published from the UK today. As for statistics from the United States of America, market participants will be interested in data on producer prices, the publication of which is scheduled for 13:30 (London time).
Daily
As already noted, the bulls on the pound after reaching 1.2668 gave the initiative to their opponents. As a result, all growth was lost, and a reversal model of candle analysis "Tombstone" appeared on the daily chart. At the same time, it appeared exactly where it is necessary, that is, at the end of the upward movement and in a strong price zone.
In this regard, today, with good reason, we can expect a downward trend from the GBP/USD currency pair, the goals of which may be the previously broken resistance at 1.2541 and the Kijun line of the Ichimoku indicator, which passes at 1.2531. I consider the 89 exponential moving average, which is at 1.2492, to be a longer-term goal of the pair's probable decline. At the same time, closing today and the entire trading week below the most important psychological and technical level of 1.2500 will only emphasize the further downward prospects of the instrument.
The bearish scenario for the pound will be untenable only in the case of bullish absorption of yesterday's reversal candle "Tombstone". To tell the truth, it is hard to believe this, so I consider the main scenario to be a downward one, and the main trading idea is to sell the pound/dollar pair.
H4
Looking at this timeframe, we see that the pair is under quite strong selling pressure. If the decline continues, then, as already noted, the quote will fall to 1.2541, and the more distant targets of sellers of the British currency are in the price zone of 1.2500-1.2473. This is where the moving averages used (89 EMA, 50 MA, and 200 EMA) are located. We can assume that the pair will find support in this area and will be able to adjust a little. Naturally, this will only happen if the quote falls into the selected zone. The appearance of bullish models of Japanese candlesticks here will give a signal to open purchases, but for now it is better with small goals.
If the pair returns above 1.2600, tries to climb to yesterday's highs, does not reach them and forms a bearish model (or models) of Japanese candles, it is worth thinking about selling with goals in the area of 1.2540-1.2500.
Given yesterday's daily reversal model of candle analysis "Tombstone", the main trading idea for today is the sale of GBP/USD.
I recommend that you observe the behavior of the price when it tries to return above 1.2600. According to the author's personal opinion, a more extensive zone for opening short positions is located in the price area of 1.2600-1.2645.
Let's see how the market closes today and the entire trading week, and on Monday we will more accurately determine the positioning of the pound/dollar pair. At the moment, the "British" shows a high probability of completing the growth and further good downward prospects. Let's see if these expectations are met and whether the market will take into account the technical picture. In particular, yesterday's daily reversal pattern of Japanese candlesticks.
Have a nice weekend!
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