Overview:- Few days back GBP/USD tested the 1.1409 level but could not sustain at that level and bounced from there aggressively. Today at the time of writing the pair is trading at 1.1800 level which is another hope for bulls. Well the pair is trading in the downtrend and so we are getting some trend reversal signals but for bull’s it will be not an easy task.
Also, for the clear reversal pattern we need a daily along with weekly closing above 1.20000 level then only we may announce that pair has bottomed out. Today it will be an early buy call, but for intraday traders the momentum is favorable so we will advised to go for buy with tight stop loss.
Earlier, from March 10, we are watching a clear blood bath in the pair where it started to decline from 1.3127 and continuously slipped to 1.14000 level which is a major downfall since 2007. Well the way bears have reacted so far it seems like they are beating the bulls like black and blue and pair is making successively lower lows and lower highs aggressive like leaps and bounds.
Fundamental Analysis:-
Broad-based dollar losses seem to be powering gains in GBP/USD in Asia. The dollar index, which tracks the value of the greenback against majors, is currently trading at 101.48 – down 0.30% on the day – having hit a high of 101.91 early Wednesday.
Technical Analysis:- From technical prospective we can see that pair has forming the double bottom pattern on hourly chart which is a bullish signal itself at an initial phase. A valid breakout of 1.1934 level will open the way towards the 1.2150 and 1.2300 with a daily closing above 1.2000 level itself.
Oversold RSI question the sellers on the daily chart whereas on 4 hourly chart the bullish crossover on the MACD indicator is providing us bullish signal and RSI is also providing us bullish signal. Buyers will wait for a sustained break of 50-day EMA i.e. 1.1934 for clear picture. Bulls are leading in the game and playing at front foot and they are dominating the bears for the time being The question still arises that weather bulls will make the drive or not ?
We will keep our view bullish on the pair as long as 1.1400 level remains intact on closing basis. Odds are in favor of bulls and intraday bias remains bullish on pair. Pair is moving still below minor and major EMA lines which suggest that bulls will come up to retest the moving average lines at least. The bullish divergence on the RSI is also suggesting buying the pair which is a leading indicator.
What next:- The 1.2080 level is immediate resistance level followed by 1.2280 whereas 1.1500 level is strong key support level followed by 1.1400 level.
Trade idea:- Based on chart and studies above we can suggest that buy the pair around current levels 1.1790-80 target is 1.2000 and 1.2200 and 1.2300 sl is 1.1450 level.
