26.01.202114:00 Forex Analysis & Reviews: Analysis and forecast for GBP/USD on January 26, 2021

Daily

Yesterday, the pound/dollar currency pair was trading without a certain pronounced direction, and as a result, a doji candle appeared on the daily chart of this instrument with a long upper shadow and a tiny bearish body. In principle, after Friday's candle with a long lower shadow, it could be assumed that the market does not want to move down, and therefore will grow. However, yesterday's trading on GBP/USD showed the weakness of the bulls on the pound, which their opponents immediately took advantage of and took the course of trading on the pair under their control. As a result, Monday's trading ended below the very important and strong level of 1.3700, at 1.3671.

Today, at the time of writing this article, the bears on the pound have seriously diverged, and the pair shows a rather intense downward trend. Trading is already below the strong support level of 1.3631, where the blue Kijun line of the Ichimoku indicator also passes. It is characteristic and quite unusual that the data on the UK labor market already published today turned out to be better than economists' expectations, but instead of strengthening, the British currency shows a fairly significant drop. If you go back to the British labor market data, the unemployment rate was 5% instead of the expected 5.1%, and the number of applications for unemployment benefits instead of the projected 35 thousand was only 7 thousand. Market participants have not yet fully digested the information received on the UK labor market and have not started to play such positive figures.

H4

The four-hour chart clearly shows that the pair has started testing the brown resistance line of 1.3450-1.3518 for a breakdown. I would venture to assume that the further direction of the British pound will depend on its breakdown or lack of it. Given the good reports on the UK labor market, and on the technical side, finding a quote at the support line, it is risky to buy the "Briton" from current prices. For more cautious traders, I recommend waiting for the attempts to break the designated support line in the end and only then decide on entering the market. If the breakout attempts are unsuccessful and as a result of the rebound up from the support line, a reversal bullish pattern of candle analysis appears, we buy with the nearest goals in the area of the 37th figure. In the case of a true breakdown of the brown support line, we wait for the price to consolidate below it, after which, on a pullback to the broken line, we sell with targets in the price zone of 1.3555-1.3540.

I note that on the eve of tomorrow's Fed decision on rates and the press conference of the Chairman of the Federal Reserve Jerome Powell, it is not necessary to set large targets for open positions.