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GBP/USD Bounced off 1.3500. What Now?

January 12, 2021 at 5:30 by Dorin Rosu

The Great Britain pound versus the United States dollar currency pair seems to be willing for another try to pass 1.3616. Is the current context favoring such a scenario?

Long-term perspective

From the 1.2818 high, the price retraced until the 1.2251 low. From there, it rallied until it almost touched the 1.3502 intermediate level.

However, as 1.3502, alongside the triple resistance area defined by the falling trendline, the 1.3261 level, and the upper line of the ascending channel, was the bearish safety net, the price ebbed until the 1.2675 low.

Nevertheless, determined, the bulls rotated the price and continued what they started at 1.2251. Like so, they conquered 1.3261, the firm area that previously opposed their advancement.

So, with 1.3261 ironed out, the bearish “safety net” that the 1.3502 level represented was the next bullish target.

Still, after the bulls arrived at the double resistance area crafted by the upper line of the ascending channel and the 1.3616 level, they were met with a lot of bearish opposition, as the fall until the 1.3451 low suggests.

But the bullish conviction made it possible for the price to get back above the 1.3502 level. So, as long as the price oscillates above 1.3502, 1.3619 is a pitstop on the path to 1.3854, the main bullish target.

Nonetheless, if 1.3502 gives way and switches to resistance, then a new fall may be set into motion, 1.3261 being the first bearish objective.

Short-term perspective

After the low of 1.3187 validated 1.3175 as support by strongly retracing prior to reaching it and departing from 1.3268 as well, the price climbed until the 1.3703 high.

Shortly after, it slipped beneath 1.3652, which became resistance. As a result, the price consolidated confined by the level and the area just above the 1.3515 level.

Then, the bears attempted to gain traction by sending the price beneath 1.3515, but the bulls swiftly took that out of the way, putting the price back above the level, thus rendering the low of 1.3451 as part of a false piercing.

So, if this remains a false piercing, then 1.3652 is up next, followed by 1.3771. Only if the price falls back beneath 1.3515, then the bears may hope for the intermediary level of 1.3392.

Levels to keep an eye on:

D1: 1.3502 1.3619 1.3854 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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