Trading Forex and CFDs is risky
Read HotForex Daily Market Analysis

Next stop 1.4000 or 1.4200?

Market Analysis

GBPUSD, H4 and Weekly

Sterling continues to be one of the strongest currency on the day, posting a near 0.5% average gain versus the dollar, euro and yen. Cable traded for 3rd consecutive day above the 61.8% recovery since Brexit Sell of, and above the 50% recovery since 2015 peak. With the dollar coming back under pressure, led by a rebound in EURUSD, after posting fresh recovery during the Asian session, GBPUSD is traded above February’s 2016 support, at 1.3850. The 1.3850 level has been tested several times since yesterday, hence the break above that could be consider significant for pair’s future performance. 

By observing the Daily and weekly time-frame of Cable, we have noticed that upper Bollinger Bands keep extending its pattern in both time-frames, suggesting that bulls are in major control of the pair. In the weekly time-frame the pair is well supported by the 20-weeks MA since April 2017, while in the Daily time-frame the price action moves above 200-Day SMA since June 2017. This wider picture of the pair along with Daily momentum indicators, remaining positive, suggests that Cable is likely to test the round 1.4000 level, which is in the mid of 50 and 61.8 Fibonacci level since 2015.  The Daily MACD remains positive since November, while RSI is at 75, indicating that there is further upwards space. Therefore a break and hold above 1.4000 would provide further positive momentum, with the next resistance level at the confluence of 200-Weekly MA and the 61.8% Fibonacci level, at 1.4230.

In shorter time frame, significant  was the break of the strong resistance at 1.3850. Therefore an entry was taken on the break of this level, with target at yesterday’s high, at 1.3950. Support area was set between 20-period MA, at 1.3800 and 1.3770. The Bollinger Bands extending their upper line in the intra-day picture as well, while the pair is forming high highs and higher lows since January 11. Intra-day Momentum indicators configurated positively, with Stochastic above neutral, positive MACD and RSI reaching 70 and sloping further up, giving further bullish signals for today.

Hence positive momentum is expected on cable overall, with next key events the US shutdown on Friday and Friday’s retail sales report for December out of UK, where a decline of 0.8% m/m (median -0.6% m/m) is expected, which would correct some of the 1.1% m/m gain that was seen in November.

Click here to access the HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:

Andria Pichidi

Market Analyst

HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Risk Warning: Trading leveraged products such as Forex and CFDs may not be suitable for all investors as they carry a high degree of risk to your capital. Please read the full Risk Disclosure.

Risk Warning: Remember Forex and CFDs are leveraged products and can result in the loss of all invested capital. Please consider our Risk Disclosure.