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GBP/USD Retracing from 1.3703. Bulls in Danger?

January 5, 2021 at 6:04 by Dorin Rosu

The Great Britain pound versus the US dollar currency pair seems to take a pause from the rise. Is this the chance for the bears?

Long-term perspective

From the 1.2251 low, the price extended until very close to the intermediate level of 1.3502. From there, it retraced under the triple resistance area defined by the 1.3261 level, the descending trendline, and the upper line of the rising channel, continuing the fall until 1.2675.

Still determined, the bulls started a new climb from the 1.2675 low. In their path, they were repeatedly challenged by the bears, who used every context to obtain a fall. As a result, on November the 11th, the bears attempted to validate 1.3261 as resistance — the bulls turned the situation in their favor, driving the price above 1.3261 and sending it to 1.3502.

Nevertheless, from the double resistance that 1.3502 alongside the upper line of the ascending channel represents, the bears tried it again, crafting the 1.3134 low in the process — the bulls sent the price to the next double resistance area, formed by the same upper line of the rising channel but with the 1.3616 level.

The bears continued to venture, as they carried the price to 1.3687, a higher low compared to the previous one at 1.3234. So, the bulls had the argument they needed for another rally, one that managed to craft the 1.3703 high.

Therefore, for the time being, every fall is a bullish chance to join the market at a better price and send it to a greater one.

In this context, if 1.3502 becomes support, then 1.3616 may be conquered by the bulls. If this happens, 1.4122 is their goal.

On the flip side, if 1.3502 falls, then the bulls can regroup at 1.3261.

Short-term perspective

From the 1.3187 low, the price extended until the 1.3703 high. Then, it slipped under 1.3652 and ebbed towards 1.3515.

As long as 1.3515 keeps its supportive role, the bulls can make a new attempt to validate 1.3652 as support, which, if it happens, opens the path to 1.3771.

On the other hand, if 1.3515 cedes, then the drop could extend until 1.3392.

Levels to keep an eye on:

D1: 1.3502 1.3616 1.4122 1.3261
H4: 1.3515 1.3652 1.3771 1.3392

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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