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06.01.202012:55 Forex Analysis & Reviews: Technical Analysis on GBP / USD for January 6, 2020

Once again, welcome dear traders!

This article will focus on the most important technical nuances that are observed on the charts of the GBP/USD currency pair. However, before moving on to technical analysis, I would like to recall that this week will be full of important macroeconomic reports. It seems that the main releases, which will draw a line under the results of weekly trading, will be the data on the US labor market, which is to be published on Friday. The release date, time and forecasts for all statistical releases can be seen in the economic calendar.

Weekly

Exchange Rates 06.01.2020 analysis

The candle that formed on the basis of the last five days certainly has a bearish look. However, it did not appear at the end of the upward movement, which leaves the chances of it working out ambiguous. Thus, we have to figure out various options.

If the pair grows and the weekly trading closes above past highs of 1.3282, the previous candle will be absorbed by the growth and cease to be relevant. In such a situation, it will be possible to expect a continuation of the rise, the immediate goal of which will be a strong technical area of 1.3380 to 1.3420.

At the time of writing, the pair is trying to return above the Tenkan line of the Ichimoku indicator, which runs at 1.3150. This in itself is a pretty strong technical level, and in addition to the Tenkan, there is also a 23.6 Fibo from a 1.1957 to 1.3513 growth. In the current situation, pound bulls are active and are pushing the course towards up. What will happen in the end will become clear only after the closing of trading on January 6 to 10.

If the GBP/USD sentiment changes in favor of the bearish one, you need to observe the price behavior near the important level of 1.3050, leaving below which will open the way to the area of 1.2913 to 1.2903. Here are 89 exponential moving average, the upper boundary of the weekly Ichimoku cloud, as well as the lows of the week before last. These, in my opinion, are benchmarks on the weekly chart. Thus, we pass to smaller timeframes.

Daily

Exchange Rates 06.01.2020 analysis

After the auction opened on January 2 with a bearish gap, a reversal model of the Harami candlestick analysis appeared. This model assumed a high probability of a subsequent decline.

And indeed, the next day, the pound bears began to win back the reversal candle pattern, but their fervor very quickly dried up. The pair already felt a pretty strong support at 1.3053 and then bounced up. At the moment, the British currency is growing. But how stable and lasting will it be? That will become clear in the price zone of 1.3150 to 1.3200.

The mark 1.3150 has already been mentioned in the description of the weekly chart. Kijun daily line, which is also able to create difficulties with moving quotes up, is at 1.3200. I believe that the breakdown of 1.3200 and the closure of day trading above will signal a further ability of the pair to strengthen. Ideally, it is desirable that several consecutive day candles close above 1.3200.

Despite the current bullish disposition, I do not rule out a change of mood and a reversal of the pair in a downside direction. In addition, the bearish divergence of the MACD indicator persists, which can serve as an additional signal for the implementation of the downward scenario.

If we go to the recommendations, then I consider sales as the main trading idea for the GBP/USD pair at this point in time. You can take a closer look at the opening of short positions from the already designated price area of 1.3150 to 1.3200 and higher, after the pair has risen to the price area of 1.3212 to 1.3275. In both cases, it is worth looking for candlestick signals to open short positions on 4-hour and / or hourly charts. So it will be more reliable and calmer.

Good luck!

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Ivan Aleksandrov,
Analytical expert of InstaSpot
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