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Good day, dear traders!
Despite the concern of market participants about new outbreaks of the COVID-19 pandemic, the pound/dollar currency pair showed strengthening in yesterday's trading.
Daily
As you know, the aggravation of the epidemic of a new type of coronavirus infection makes the US dollar more attractive to investors as a protective asset, however, this did not happen in the pair with the British currency at the trading on July 7. Tuesday's trading ended with a strong rise in sterling and the session closed at 1.2537.
Here you should pay attention to some technical nuances. First, the resistance level of 1.2541 was only punctured, but not broken. Secondly, it is necessary to pay attention to the strong resistance to the price provided by the 200 exponential moving average, which passes at the level of 1.2584, which is not far from the strong technical mark of 1.2600. Another interesting point was the closing of yesterday's trading above the Kijun line of the Ichimoku indicator. However, as has been repeatedly emphasized, it is not quite correct to judge the truth of the breakdown only by one candle closed above (or below).
Yesterday's growth in the pound likely took place against the background of market participants' expectations that the UK government will present the next plans to support the economy of the United Kingdom. Today, at the time of writing, the pound/dollar pair is slightly strengthening and may re-protest the breakout of the 200 exponential and the resistance level of 1.2590, where the maximum values of yesterday's trading were shown. At the same time, in the event of a change in market sentiment, a downward turn is not excluded. In more detail, this will be indicated by candlestick signals on smaller timeframes.
H4
During this period, the pair is trading above the used moving averages, which in itself contributes more to the implementation of the ascending scenario. Judging by the current candle, which has a lower shadow and is forming a bullish body, the pair intends to test yesterday's highs, in the event of a decline and passing 1.2600, the road to 1.2645 and 1.2687 will open, where strong resistance of sellers of the British currency is noted.
It is still difficult to say how stable the strengthening of the British pound will be, so we will consider positioning in both directions. At the same time, in my opinion, purchasing is a higher priority.
I consider it too risky to buy at the breakout of the resistance of 1.2590, above which the mark of 1.2600 passes. But if the pair breaks through above 1.2600 and fixes above this mark with three consecutive closed candles, on the pullback to the area of 1.2600-1.2585, you can consider buying the pound/dollar pair.
At the same time, since there are attempts to break through the resistance of 1.2590, it is impossible to exclude that they will be unsuccessful. This will be signaled by the appearance of bearish candles on the four-hour and hourly charts of the pound/dollar pair, which will signal the opening of short positions on the pound.
Once again, I would like to note that in the absence of macroeconomic statistics, today's trading will be mainly influenced by technical factors.
Good luck!
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