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Hello, dear traders!
At the start of 2021, the pound/dollar pair is trading in an uptrend. The bullish movement also occurred at the end of the previous year. It seems that all the optimism and pessimism regarding the UK-EU trade agreement has already been taken into account by market participants. Currently, GBP/USD is steadily moving upward.
Daily
Notably, trading on GBP/USD opened with a small price gap, which is not surprising. Nevertheless, this gap was so insignificant that it almost immediately ended. Currently, the GBP/USD pair is steadily rising and trading around 1.3675. As expected earlier, if the upward trend continues, the pound sterling may advance to 1.3700. The currency pair is likely to encounter strong resistance at this level and rebound. Otherwise, a correction may start. This is exactly what is happening now. Today, the currency pair has already tested the 1.3700 mark. It is a strong resistance level. Therefore, it is not surprising that the pair's first attempt to break through it failed. If the price closes above 1.3700 and consolidates, the next bearish targets will be seen at 1.3740, 1.3780, and 1.3810. Most likely, it will happen with time as bears can also influence the course of trading and try to make it as difficult as possible for their opponents. If there is a reversal candlestick below 1.3700, it will give a sell signal on GBP/USD. However, so far, it will be only with an eye to a possible correction. Still, it is too early to talk about a reversal and a change in the uptrend.
H1
On the hourly chart, GBP/USD is moving in an ascending channel, where 1.3430-1.3472 is the support line and 1.3685 is the resistance line. Given the trading strategy and the fact that the pair is trading in the upper part of the channel, one should consider buying the pair after the price has approached the middle dotted line of the channel. Apart from that, one can open long positions after the price has reached the lower border of the channel. From my point of view, the second option is more preferable. Firstly, the buy price is lower. Secondly, the support line of 1.3600 and 89 exponential moving average, located near the lower border of the channel, are able to provide a stronger support and bring back the pair to the upward trend. At the moment, it is too risky to open short positions. Nevertheless, they are also relevant but with smaller targets. Today, the United Kingdom will deliver its manufacturing PMI report. We will see how investors will react to the macroeconomic indicators this year. In 2020, especially in the second half of the year, the fundamental factors were often ignored.
Have a nice trading day!
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