18.05.202111:16 Forex Analysis & Reviews: Analysis and forecast for GBP/USD on May 18, 2021

Today's article on the pound/dollar currency pair will begin with summing up the results of the past five days of trading. We will also discuss the most significant fundamental events for this trading instrument, determine the further direction of the British pound sterling paired with the US dollar, and search for points to open trading positions.

Weekly

So, at the auction on May 10-14, the GBP/USD pair showed growth and returned to the limits of the ascending channel. It is worth noting that the return to the abandoned ascending channel occurred after the pair had already gained a foothold under the broken support line for more than three candles in a row. Yes, this happens sometimes, and the current situation is just one of these exceptions. At the moment of writing, the GBP/USD pair moves towards an important and strong technical level of 1.4200, from the passage of which the further fate of the quote will be decided. At least, that's what it looks like at the moment. Finally, the breakout of the resistance at 1.4231, where the February highs of this year were shown, will announce the pair's further growth. Another important factor confirming the strong bullish sentiment on the instrument was overcoming a strong and important technical resistance zone of 1.4000-1.4015. As we remember, this price zone did not let the quote go higher for quite a long time, and now it is passed. Judging by the weekly timeframe, we can most likely count on the subsequent strengthening of the quote, and this will be confirmed by the breakdown of the resistance area of 1.4200-1.4231 and the closing of the week above.

Daily

Today at 07:00 London time, data on the UK labor market was released. Contrary to the 4.9% forecast, unemployment was at 4.8%, which is certainly a positive point, indicating a gradual recovery of the labor market from the COVID-19 pandemic. But the number of applications for unemployment benefits was in the red zone and amounted to minus 15.1. Nevertheless, despite such mixed data, the "Briton" shows an impressive strengthening and is already close to the mark of 1.4200. Moreover, there is a breakdown of the resistance of 1.4165, where the maximum trading values were shown on May 11. However, there are still many interesting macroeconomic reports ahead, the most significant of which will be the minutes of the last FOMC meeting.

Trading recommendations for GBP/USD:

Given the technical picture on the two timeframes considered, as well as the market sentiment that is in favor of the British currency, in my personal opinion, the main trading idea for GBP/USD is to buy. I suggest that we consider opening purchases after fixing above 1.4200, and an even more reliable option would be a true breakdown of the resistance at 1.4231. In this case, a pullback to the area of 1.4230-1.4200 can open long positions. I recommend looking for purchases at more favorable prices after short-term pullbacks to the broken resistance area of 1.4165. For sales, the appearance of a reversal pattern of candle analysis in the price zone 1.4200-1.4230 is necessary, and the closing price of the reversal candle should be below the 1.4200 mark. In tomorrow's article on this currency pair, we will analyze smaller charts and make necessary changes to this trading plan.