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Bulls on GBP/USD Held Back by 1.3616?

December 29, 2020 at 5:35 by Dorin Rosu

The Great Britain pound versus the US dollar currency pair seems to have a hard time conserving the momentum. Is the ascending trend in danger of being overthrown by the bears?

Long-term perspective

From the 1.2251 low, the price accelerated beyond the triple resistance — defined by the 1.3261 level, the falling trendline, and the upper line of the ascending channel — only to stop a hair away from the 1.3501 intermediary level.

Even if the bulls hoped that the triple resistance area would serve as support, their speedy expansion backfired, as they have given the bears arguments to render the latter part of the movement as a false piercing.

As a result, the price dropped to 1.2675. However, from there, the bulls kept pushing the price towards the north, doing a pretty good job as not only that they passed the former resistance of 1.3502, but they also touched the next firm resistance, the one noted by 1.3619 alongside the upper line of the rising channel.

Nevertheless, this double resistance now seems to pose a problem, as it prevents additional advancement from the bullish side. Even more, the high of the candle on December the 24th is pointing towards a possible double top pattern — if taken alongside the high of December the 17th.

If this is the case, then 1.3261 may cede, allowing further decline beyond the previous lows — 1.3134 and 1.3187, respectively — and to the double support area marked by the 1.3000 intermediary level and the lower line of the ascending channel.

On the other hand, if 1.3261 holds as support, then range trading between it and 1.3616 may develop.

Still, if the bulls swiftly recover 1.3502, they could have a chance to validate 1.2616 as support.

Short-term perspective

After printing the low of 1.3187 in the vicinity of the 1.3175 firm support, the bulls took the price above another important level, 13515, respectively, noting the 1.3619 high in the process.

Nonetheless, the price skipped under 1.3515, instilling bearish optimism. So, if the bulls quickly recapture 1.3515, then they could head for 1.3652. On the flip side, if 1.3515 remains resistance, then 1.3392 may be the next bearish objective. If 1.3392 doesn’t offer support, then 1.3268 is the closest bearish stop.

Levels to keep an eye on:

D1: 1.3261 1.3000 1.3616 1.3502
H4: 1.3515 1.3652 1.3392 1.3268

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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