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Good day, dear traders!
The pound/dollar currency pair finished the second week in a row with impressive growth. This time, the British pound strengthened against the US dollar by 1.18% and became the leader among all major currencies that showed growth against the main world reserve currency.
As already noted, at the trading on July 6-10, market participants preferred the Japanese yen and Swiss franc as safe-haven currencies. The departure of investors to the haven was due to the continued growth in the daily number of COVID-19 infections in the United States, Brazil, and India. At the same time, the US confidently holds the lead in this disappointing statistics.
Market participants' concerns about the ongoing rampant new type of coronavirus infection partially overshadowed the macroeconomic statistics released last week. From the data that will be received this week, the impact on the price dynamics of the pound/dollar pair may have the consumer price indices of the United States and Great Britain. Other important macroeconomic indicators from the UK and the US will also be published and in considerable numbers. Since the pound/dollar currency pair is supposed to be considered daily, I will indicate important fundamental events on the day of their release. As for today, the attention of traders will be focused on the speech of the head of the Bank of England, Andrew Bailey, which is scheduled for 16:30 London time. By the way, at the same time, the speech will be delivered by a member of the Federal Open Market Committee (FOMC), John Williams. However, it seems that the speech of the chief English banker will be a much more important event for investors.
Well, it's time to move on to the technical part of the review of the pound/dollar currency pair, and, given the Friday closing of weekly trading, let's start with the appropriate timeframe.
Weekly
As noted in previous articles on this currency pair, the strong technical level of 1.2250 was the starting point for the growth of the quote, and this is visible on the price chart. As a result of the rise in the past week's trading, sellers' resistance was broken at 1.2541, a significant mark of 1.2600 was passed, and the closing price of 1.2618 was above 50 of the simple moving average, which passed at 1.2610.
The above factors, as well as the relatively short upper shadow of the last weekly candle, allow us to count on further growth of the quote. If these calculations are justified, the bull targets for the pound will be the previous highs at 1.2668, and then the levels of 1.2686, 1.2700, 1.2738. At the last mark, the lower border of the weekly cloud of the Ichimoku indicator passes, as well as the exponential moving average.
The bullish scenario will be under a huge question if, as a result of the decline, weekly trading ends at the important psychological and technical level of 1.2500, and even more so below the Tenkan line, which is located at 1.2442. However, there are no technical grounds for such pessimistic calculations yet, so I will give preference to continuing growth in the weekly period.
Daily
But on the daily chart, the situation is somewhat different. After the appearance of the reversal model of candle analysis "Tombstone" on July 9, there were downward risks. Bears on the "British" really tried to take advantage of the situation and began to put pressure on the quote, but at 1.2565 the pair found strong support and began to recover, ending trading on June 10 with growth.
However, until there is a bullish absorption of the reversal candle "Tombstone", a downward scenario should not be excluded. Only a confident close above the highs of July 9 at 1.2668, and even better, a breakdown of the next resistance level at 1.2686, will indicate the pair's readiness to grow into the price zone of 1.2700-1.2740.
Until the tombstone candle is consumed, it is difficult to make recommendations regarding the pair's purchases. Alternatively, you can take a closer look at opening long positions after the pair drops to the area of 1.2590-1.2540. We are looking for purchases at lower prices in the area of 1.2535-1.2500. Now is not the best time to open sales. We will discuss this positioning option, if it is relevant, in tomorrow's article.
Good luck!
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