In the world of forex trading, understanding the dynamics of currency pairs like the GBP/USD is crucial for success. As we witnessed last week, the gbp usd pair faced resistance at the 1.25240 level, a supply zone we had previously identified along with 1.25648 and 1.26252. However, the pair didn't retrace to one of our anticipated demand zones (1.20975, 1.19923, or 1.18887) as it continued its bullish pressure.
|GBP/USD reached the 1.25240 resistance level|
|Technically bullish due to 20-day EMA and MACD|
|Bearish divergence visible on 4-hour chart|
|Trendline support crucial for future direction|
|Monitor ZEW economic sentiment and ECB rhetoric|
|Key economic events to watch in the coming week|
|Employ risk management techniques and patience|
daily GBP/USD chart Outlook
Now, the resistance or supply zone on the daily GBP/USD chart remains a critical price level to monitor. The significant question is whether the rejection on Friday, April 14th, 2023, will push the price down to the newly identified demand/support zone at 1.21821.
Notably, we are still technically bullish, as the MACD and 20-day exponential moving average (EMA) suggest. This is because the current price is above the 20-day EMA, and the MACD line is above the zero level.
GBP/USD 4H Chart: Bearish Divergence in Sight
Similar to the EUR/USD pair, we can see a bearish divergence in the GBP/USD, indicating bear control. The highs of Tuesday, April 4th, and Thursday, April 13th, 2023, validate the divergence assumption when compared with the MACD signal line.
This is the first time the 4-hour GBP/USD chart is showing an external bearish divergence since March 2023. Additionally, the currency price is currently sitting at the trendline support on the 4-hour chart.
Zooming in on the 1-hour GBP/USD chart
Zooming in on the 1-hour GBP/USD chart further validates the established bias, as the MACD has already crossed the zero level and bear pressure can be noticed with a big bearish push on last Friday. Will the trendline support price action enough to continue bullish, or will it break and later retest to act as resistance? Well, only time can accurately answer that question.
Fundamental Factors to Watch
The GBP/USD currency pair may be influenced by a range of factors next week. However, some of the most significant factors include the ZEW economic sentiment and Euro Area inflation print, as well as ongoing hawkish rhetoric from the European Central Bank (ECB). These factors can impact the EUR/USD currency pair, which can, in turn, affect the GBP/USD currency pair. Therefore, it is essential to keep track of these events to understand the potential direction of the GBP/USD currency pair.
For a more comprehensive analysis of the currency pair, you can check out websites that offer real-time rates, interactive charts, and expert insights and forecasts. Additionally, you can monitor the German ZEW Economic Sentiment results in real-time to stay up to date with the latest developments.
Key GBP/USD News Expected in the Coming Week
GBP/USD news in the coming week can influence the price. Looking at the schedule below:
- Tue, Apr 18: USD Empire State Manufacturing Index
- Tue, Apr 18: GBP Claimant Count Change, GBP Average Earnings Index 3m/y
- Wed, Apr 19: GBP CPI y/y
- Thu, Apr 20: USD Unemployment Claims, USD Philly Fed Manufacturing Index, USD FOMC Member Waller Speaks, USD Existing Home Sales
- Fri, Apr 21: USD Flash Manufacturing PMI, USD Flash Services PMI
As we move through the week, it's essential to keep an eye on these economic indicators and events, as they can cause significant fluctuations in the GBP/USD currency pair. Having a thorough understanding of how these factors affect the market will help you make informed decisions when trading the GBP/USD pair.
How to Approach GBP/USD Trading Amid Uncertainty
While the technical and fundamental analyses offer valuable insights, there's always a level of uncertainty in the forex market. To navigate these challenges, consider employing the following strategies:
- Stay informed: Continuously monitor the news, economic releases, and other relevant information to stay up-to-date with the latest developments affecting the GBP/USD pair.
- Use technical analysis tools: Utilize technical indicators such as moving averages, MACD, and trendlines to help confirm potential price movements and provide entry and exit signals.
- Employ risk management techniques: Always use proper risk management, including stop-loss orders and position sizing, to protect your trading capital.
- Practice patience: Wait for clear signals and the right market conditions before entering a trade. Avoid impulsive decisions based on emotions or FOMO (fear of missing out).
- Learn from experience: Keep a trading journal to document your trades, emotions, and thought processes. Regularly review your journal to identify patterns and areas for improvement.
In conclusion, the GBP/USD currency pair faces a tug-of-war between bulls and bears, with technical and fundamental factors pushing the market in different directions. By staying informed, employing risk management techniques, and using technical analysis tools, traders can navigate the uncertain landscape and make more informed decisions when trading the GBP/USD pair.
Remember to monitor key events, such as the ZEW economic sentiment, Euro Area inflation print, and ECB rhetoric, as they can influence the GBP/USD pair's direction. By keeping a close eye on these factors and employing the strategies mentioned above, you can optimize your trading approach and maximize your chances of success in the GBP/USD market.