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22.01.202503:49 Forex Analysis & Reviews: Trading Recommendations and Analysis for GBP/USD on January 22: The Pound Faces Strong Resistance Again

Relevancia 20:00 2025-01-22 UTC--5

GBP/USD 5-Minute Analysis

Exchange Rates 22.01.2025 analysis

The GBP/USD currency pair experienced a decline followed by a rebound on Tuesday, ending the day near the Senkou Span B line, which serves as a strong resistance level. This makes it challenging for the pound to break through. However, if it manages to surpass this line, it could indicate the continuation of a local upward correction, albeit one that is still considered a correction on higher timeframes. An ascending trendline is supporting the pound's growth, but a price drop below this line would indicate the end of the current trend.

There were no significant macroeconomic factors driving the pound's growth on Tuesday. In the morning, the UK released reports on unemployment, wages, and jobless claims. While not all reports were disappointing, the most crucial one—the unemployment rate—showed negative results. As a result, although the pound was not necessarily expected to decline, it shouldn't have risen either. This aligns with our view that the current upward movement is primarily a technical correction. This correction may continue for some time, and the broader trend can be evaluated on higher timeframes. We maintain that the global and even medium-term downtrend is still not over.

On the 5-minute timeframe, GBP/USD produced two trading signals on Tuesday. Overnight, the price bounced back from the 1.2255 level, increasing by about 40 pips. However, it's unlikely that traders opened positions during the night. Later in the day, there was another rebound from the 1.2237–1.2255 range and the Kijun-sen line, which propelled a rise toward the Senkou Span B line, allowing traders to realize a profit of around 70 pips.

COT Report

Exchange Rates 22.01.2025 analysis

COT reports on the British pound show that the sentiment among commercial traders has been constantly changing in recent years. The red and blue lines in the reports, representing the net positions of commercial and non-commercial traders, frequently intersect and are typically close to the zero mark. Currently, these lines are near each other, suggesting there are approximately equal numbers of long and short positions.

On the weekly timeframe, the price initially broke through the 1.3154 level and then dropped to the trend line, which it successfully breached. Breaking this trend line suggests a high probability of the pound's continued decline. This concerns the long-term perspective.

According to the latest COT report, the "Non-commercial" group closed 700 buy contracts and opened 13,300 sell contracts. As a result, the net position of non-commercial traders decreased by 12,600 contracts over the week, which is negative for the pound.

The fundamental outlook still does not provide any support for long-term purchases of the pound sterling. The currency has a strong likelihood of resuming its global downward trend. Thus, the net position may continue to decline, indicating a reduced demand for the pound sterling.

GBP/USD 1-Hour Analysis

Exchange Rates 22.01.2025 analysis

On the hourly timeframe, GBP/USD continues to show a bearish outlook, and any new upward trend is unlikely to result in significant growth for the pound. Currently, there are no fundamental reasons for the pound to rise, except for the occasional technical corrections that occur. This pattern of weak corrections followed by sharp declines has been consistently observed week after week. In the medium term, we expect movement towards $1.1800.

For January 22, the following key levels are identified: 1.2052, 1.2109, 1.2237–1.2255, 1.2349, 1.2429–1.2445, 1.2511, 1.2605–1.2620, 1.2691–1.2701, and 1.2796–1.2816. Additionally, the Senkou Span B line at 1.2336 and the Kijun-sen line at 1.2252 may also serve as significant signals. It is advisable to place a Stop Loss at breakeven once the price moves 20 pips in the correct direction. Keep in mind that the Ichimoku indicator lines can shift throughout the day, so this should be taken into account when determining trading signals.

There are no major events scheduled in either the UK or the US on Wednesday. Therefore, we anticipate market stabilization and an easing of the panic-driven selloff of the dollar due to Donald Trump's actions.

Illustration Explanations:

  • Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
  • Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
  • Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
  • Yellow Lines: Trendlines, trend channels, or any other technical patterns.
  • Indicator 1 on COT Charts: Represents the net position size for each category of traders.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2025
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