Overview:- By analyzing the daily technical chart we can see that in the last week pair has marked fabulous moment towards north side and covered all the losses in just two days and made rally from 1.2199 to 1.2706 level which is almost 500 pips on the daily chart. Presently pair has arrived at 3 month’s fresh high. The pair received supply pressure from 1.2700 level which is a key resistance level and yesterday also it marked a low of 1.2515 level.
Fundamental Analysis:- The pair bounced back on the positive news of Brexit deal negotiation by the end of October 31, well the news has been discounted already and we are again neutral for the time being and we are stick to our levels.. All gbp pairs where it’s a base currency has become so volatile so in a volatility just trust on the trend.
Technical Analysis:- Pair is moving above the minor EMA lines (9,14 and 50) and candles are also providing us bullish signal. This week’s closing matters a lot. The bullish crossover on MACD indicator is favoring the bulls and RSI has turned up to above 50 level which is showing strength in the pair. The primary trend is still bearish so sell on high will be profitable strategy. Well traders are advised to go for long if pair move above 1.2700 level and then short term outlook will change from bearish to bullish and we would suggest to short the pair as long as 1.2700 level remains intact, however will get further bearish confirmation if bears took the pair below 1.2500 level. The upper line of Bollinger band and 200 SMA line are lying near to 1.2700 which will react as resistance level.
What next:- If bears take the charge and settles below 1.2500 level then we may see further weakness in the pair and if pair give positive closing i.e. above 1.2700 and cover all the losses then we may see further buying till 1.2830 level first and furthermore. The positional traders are advised to sell the pair to follow the primary momentum. The 1.2700 level is immediate resistance level followed by 1.2800 whereas 1.2500 level is strong key support level followed by 1.2400 level.
Trade idea:- Based on chart and studies above we can suggest that sell the pair below around current levels 1.2610-20 target is 1.2500 and 1.2400 sl is 1.2710 level.
