The GBPUSD pair has been in the spotlight for forex traders in recent times, with price movements keeping traders on their toes.
Last week's consolidation saw the pair ranging between 1.23757 and 1.23532, making it a challenging time for those looking to predict future movements.
In this week's technical analysis, we'll delve into the technical and fundamental factors affecting the GBPUSD price and provide a comprehensive forecast for the week ahead.
| Key Takeaways |
|---|
| GBPUSD consolidated last week, ranging between 1.23757 and 1.23532. |
| Technical analysis suggests a bearish outlook for the upcoming week. |
| The 20-day EMA appears to act as support for the GBPUSD price. |
| GBPUSD 4-hour timeframe: Bulls in control, with support at 1.23823. |
| No clear head and shoulders pattern on the 4-hour chart. |
| GBPUSD 1-hour timeframe: Price playing around minor resistance at 1.24670. |
| Several factors can affect the EUR/USD price next week. |
| No GBP news in the coming week, but high-impact USD news expected. |
The Daily GBPUSD Chart: Bulls Struggling to Sustain Momentum
In our previous weekly technical analysis, we anticipated the GBPUSD pair to retrace on Friday, April 14th, 2023, reaching a major supply or resistance zone at the 1.25459 level. However, looking at the daily GBPUSD chart, nothing significant has occurred to make us shift our bias this new trading week.
The cable pair is likely to be bearish, with the possibility of the price reaching the April 3rd trading day low around the 1.22745 level. The last four daily candles clearly show the bulls struggling to sustain their bullish momentum. It seems the 20-day EMA is acting as support for the GBP/USD price at the moment, but is this support solid enough to push the price higher?
The GBPUSD 4-Hour Timeframe: Bullish Control, but for How Long?
Taking a look at the GBPUSD 4-hour timeframe, it appears the bulls are in control, with the support level around 1.23823 holding the price and preventing it from breaking market structure or shifting momentum. We saw the last three 4-hour candles closing bullish after reaching the demand or support zone at 1.23823.
However, there is no evidence to suggest the GBPUSD pair is forming a head and shoulders pattern on the 4-hour timeframe because the condition is not met, although it's looking like it is forming an H&S pattern.
The MACD is clearing below the zero line, but there's no reasonable momentum to support the bearish claim. The divergence identified in the last weekly analysis is still valid – we might just see the cable pair dropping like heavy rain in the coming days.
The GBPUSD 1-Hour Timeframe: A Critical Resistance Zone
On the 1-hour timeframe, the GBPUSD price is seen playing around a minor resistance or supply zone at 1.24670. This further explains why the pair has been consolidating for the most part of last week's trading.
With the earlier submission, it is very likely the pair will break the support and trade bearish next week, except the 1.24670 resistance level fails or the major resistance level identified on the daily timeframe fails.
Factors That Can Affect GBPUSD Price Next Week
Based on the current market environment, several factors can affect the GBP/USD price next week:
- No significant GBP news is expected, but the USD is packed with high-impact news that can cause reasonable volatility.
- The support level of 1.23823 is crucial, and any break below it can lead to further bearish momentum.
- The S&P Global Composite PMI in the US is forecasted to increase slightly to 52.8. If it disappoints, it could affect the USD and revive fears of a recession.
- The ongoing shortage of natural gas in the Eurozone and the threat of high energy prices are driving the euro. The ECB is adopting a more hawkish stance as inflation rises.
- Any major news or geopolitical events, such as trade disputes, can also affect the GBPUSD price.
Upcoming USD High-Impact News
Keep an eye on the following USD high-impact news this week:
- Tue, Apr 25: CB Consumer Confidence, New Home Sales, Richmond Manufacturing Index
- Wed, Apr 26: Core Durable Goods Orders m/m, Durable Goods Orders m/m
- Thu, Apr 27: Advance GDP q/q, Unemployment Claims, Advance GDP Price Index q/q, Pending Home Sales m/m
- Fri, Apr 28: Core PCE Price Index m/m, Employment Cost Index q/q, Chicago PMI, Revised UoM Consumer Sentiment
GBPUSD Price Forecast and Trading Strategy
Based on the technical analysis and upcoming high-impact USD news, traders should consider the following scenarios and strategies for the GBPUSD pair:
- Bearish Scenario: If the GBPUSD price breaks the support level of 1.23823, traders should look for short opportunities targeting the April 3rd low around 1.22745. A tight stop loss above the support level is recommended to protect against sudden reversals.
- Bullish Scenario: If the pair manages to hold above the 1.23823 support level and breaks the minor resistance at 1.24670, traders should look for long opportunities targeting the major resistance zone at 1.25459. A tight stop loss below the minor resistance level is recommended to protect against sudden bearish moves.
- Consolidation: If the GBPUSD price continues to consolidate between 1.23757 and 1.23532, traders should be cautious and look for clear breakout signals before entering any positions.
- USD High-Impact News: Traders should closely monitor the upcoming USD high-impact news, as they can cause significant volatility and affect the GBPUSD price. It is essential to manage risk and adjust positions accordingly during news events.
- Long-term Outlook: For long-term traders, the GBPUSD price seems to be bearish, with the possibility of reaching the 1.22745 level. Long-term traders should consider using wider stop losses and target levels to accommodate for short-term fluctuations.
Summary
To sum up, the GBPUSD price is likely to be bearish in the short term, with the possibility of reaching the 1.22745 level.
Traders should closely monitor the upcoming USD high-impact news and adjust their positions accordingly. Stay cautious and ensure proper risk management while trading the GBP/USD pair.
Remember, successful trading is all about understanding market dynamics, identifying potential scenarios, and adjusting strategies based on changing market conditions.
Keep an eye on the GBPUSD live chart, monitor the upcoming economic events, and most importantly, stay flexible and adapt to the ever-evolving market conditions. Good luck, and happy trading!
