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Bulls Eye the 1.4122 Area on GBP/USD

February 23, 2021 at 5:32 by Dorin Rosu

The Great Britain pound versus the United States dollar currency pair seems to be from the 1.3854 level. Will the bears be able to defend it from the ferocious bulls?

Long-term perspective

After the drop from the 1.3482 high, the price found support in the vicinity of the 1.2777 intermediary level, crafting the 1.2675 low — of where the bulls started an appreciation that, upon challenging the heavily-bearish-defended level of 1.3261, managed to instill the necessary momentum for the price to reach the next area of major importance, 1.3616, respectively.

Once above 1.3616, the bulls started a consolidation phase — one that was limited by the resistance line of the ascending channel. This apparent weakness was sensed by the bears — as a result, they strived to invalidate the supportive role of 1.3616, as the 1.3566 low points out.

As one can see, this ended up as a false piercing, just as the 1.3134 and 1.3187 lows, respectively, concluded as being false breakdowns. These events could only further catalyze the bullish optimism, which, in turn, drove the price beyond the double resistance marked by the same upper line of the ascending channel and the 1.3854 intermediary level.

As the price marches toward the 1.4122 level, the next possible scenarios may unfold. In the first one, the price bounces off the level. If this would be the case, the bulls are to make at least one attempt to rejoin the market at a better price, seeking that this second attempt would succeed in conquering 1.4122.

The second scenario is for the price to swiftly inscribe itself above 1.4122. In his case, it may either simply continue to rise or consolidate above 1.4122. This, of course, opens the door to 1.4250.

Short-term perspective

From the 1.3566 low, the bulls pushed the price towards the north, overcoming the 1.3771 resistance. After piercing 1.3771, the rise stopped at the intermediary level of 1.3863. The resulting fall, even if — at first glance — may have looked like a bearish victory, resulted in a validation of 1.3771 as support — which, in turn, facilitated further advancement.

The gained momentum aided the invalidation of the 1.3863 resistance. After another rise, followed by another fall that — this time — validated 1.3863 as support, the bulls thrust to their next objective — 1.3971.

After a relatively shy bearish defense — see the false piercing of which the 1.3951 is part of — the bulls continued the appreciation, putting the price above 1.4049.

As long as the price oscillates above 1.4049, the next bullish target is 1.4149. Only if 1.4049 cedes, 1.3971 gets exposed.

Levels to keep an eye on:

D1: 1.4122 1.4250
H4: 1.4049 1.4149 1.3141

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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