28.10.202012:22 Forex Analysis & Reviews: Outlook for GBP/USD on October 28, 2020

Good afternoon, dear traders!

On October 27, the pound/dollar pair showed in insignificant rise. Nevertheless, the British pound is still quite strong despite the risks of dropping GDP, ongoing Brexit negotiations, and worsening epidemiological situation in the UK.

At the same time, the largest number of deaths from COVID-19 was registered in the UK. Over 45 thousand British people died because of the coronavirus pandemic. A new source of infection has been found in Nottingham. There, local authorities introduced the highest level of danger. From tomorrow a one-month quarantine will begin.

Daily

Today, neither the US nor the UK will publish important macroeconomic data. That is why let's take a look at the technical analysis of the pound/dollar pair. At the moment, the pound sterling is showing good performance against the US dollar that acts as a safe-haven asset. However, a risk of a hard Brexit as well as negative interest rates introduced by the Bank of England could push the British pound lower.

The currency's resilience could be caused by some technical factors. However, the future of the pound sterling may be really gloomy. Most analysts suppose that it may begin to lose in value in the near future. At the moment, it is better to rely on the technical analysis of the pair. Thus, the red line of the Tenkan indicator Ichimoku as well as the most important psychological and technical level of 1.3000 continue to support the pair.

However, at the moment of the writing of this article, bears were trying to push the pound sterling below the level of 1.3000. The 50-day Moving Average is located at this level, thus protecting the currency. In my opinion, only a true breakdown of the Tenkan line, the level of 1.3000, and 50 MA, will indicate that the pound/dollar pair is under sellers' control. In this case, you can consider opening short positions on the pound/dollar pair after a pullback to the area of 1.3000-1.3025, especially if bearish candlestick signals appear in the designated price area on the daily or smaller time frames.

H1

At the time of writing, the pound/dollar pair was showing a fairly strong decline, which may result in a breakdown of the support level of 1.2992. At the end of the review, this happened.Thus, I suggest the following trading plan. Now, it is too late to sell and it is really dangerous, especially since the pair may find support near 1.2975 and start a correctional movement. For those who want to buy the pound sterling I recommend to take a closer look at opening long positions after a decline to the area of 1.2975-1.2970 and the appearance of bullish candlestick analysis models on the one-hour or four-hour time frames. However, the main trading recommendation is to sell after a pullback to the price zone of 1.2995-1.3005. In this case, you should pay attention to the confirmation signals in the form of Japanese candlesticks.

I wish you profitable trading!