Price action could potentially pop either way around 1.24

9 thg 4, 2020

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Although March saw lows not seen since the 1980s, ahead of a 127.2% Fib ext. level at 1.1297, price staged an impressive recovery and regained approximately 80% of the month’s losses.

Support at 1.1904/1.2235 remains relevant in April, despite recent moves to lows. Nearby resistance can be seen in the form of a trendline formation (1.7191).

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008.

Daily timeframe:

Partially altered from previous analysis –

Supply at 1.2509/1.2372 and demand coming in from 1.2212/1.2075 remain dominant fixtures on this timeframe, with the former handling price action yesterday.

Outside of this reasonably narrow formation, we have a demand-turned supply formed at 1.2649/1.2799 which has its lower edge aligning with a 200-day SMA value at 1.2648, whereas a breach to the downside could have candles test the 1.15 neighbourhood: trendline supports.

The RSI indicator continues to hover around its mid-way point at 50.00.

H4 timeframe:

Brought forward from previous analysis –

Following the formation of a hammer candlestick pattern, price staged a reasonably impressive recovery out of familiar demand at 1.2147/1.2257, set on top of a supply-turned demand at 1.2136/1.2049. Additional bullish sentiment could haul price to supply fixed at 1.2622/1.2517, which merges with a 61.8% Fib retracement level at 1.2499.

H1 timeframe:

Heading into the London session Wednesday, price retesting 1.23 and the 100-period SMA rejuvenated GBP bidding, ultimately led by a retreat in USD flow, visible on the US dollar index, or DXY. 1.24 welcomed price action amid US movement, tapping into buy-stop liquidity around highs at 1.2420 and wrapping up the session a touch beneath the said psychological level.

Stepping above 1.24 today could pave the way north for GBP/USD to tackle supply seen at 1.2520/1.2455, which houses the 1.25 handle.

Structures of Interest:

Breakout buying above 1.24 is likely to be hindered by supply at 1.2509/1.2372, based on the daily timeframe. In addition, upside north of 1.24 faces potential resistance from the underside of H1 supply at 1.2520/1.2455. Although this could suggest sellers may strengthen their grip, eyeing a dip to 1.23, this could be overruled by the fact we’re coming off monthly support at 1.1904/1.2235.