Demand from 1.2231/1.2279 held beautifully

30 giu 2020

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Support at 1.1904/1.2235 and long-term trendline resistance (1.7191) remain clear structure on the monthly timeframe, with the latter prompting a notable upper shadow in June, shaped by way of a shooting star candlestick pattern.

Concerning the primary trend, lower peaks and troughs have decorated the monthly chart since early 2008, placing 1.1904/1.2235 in a vulnerable position.

Daily timeframe:

Partially altered from previous analysis -

Thanks to Wednesday’s bearish outside day, and additional downside on Friday and Monday, demand at 1.2192/1.2361 re-entered play. This, as underscored in recent analysis, is an area not only fastened to the top edge of monthly support, it is also considered the decision point to break 1.2647 (April 14 high).

1.2235 (black level), the top edge of monthly support, was a noted level to keep tabs on as a possible reversal base from within the aforesaid demand. As you can see, active buyers chose to ignore 1.2235 and climb, consequently closing nearby session highs at 1.2401.

H4 timeframe:

Partially altered from previous analysis -

Since topping at supply from 1.2851/1.2805 early June, the pair has been in the process of constructing a bullish three-drive pattern that completes within the parapets of demand from 1.2231/1.2279, at a 127.2% Fib ext. level marked at 1.2239.

Out of demand at 1.2231/1.2279, as you can see, price regained some lost ground against the dollar yesterday, though unfortunately left 1.2239 unchallenged. Looking ahead, trendline resistance (1.2813) now represents a potential headwind for the pair.

H1 timeframe:

A number of key technical resistances were overrun Tuesday, including the 1.23 level and the 100-period simple moving average. The day’s close, however, landed within the parapets of a supply zone at 1.2415/1.2386, housing the 1.24 level and intersecting with the H4 trendline resistance underscored above.

Also of interest is the RSI oscillator recently drilled into overbought territory, but appears to be in the process of flattening.

Structures of Interest:

Monthly price, despite Tuesday’s rally, still appears to have eyes for the top edge of support at 1.2235, located within the lower section of daily demand at 1.2192/1.2361.1.2235 will likely make an entrance in the event we fail to build on the recent recovery.

Against the backdrop of the higher-timeframe position, H1 and H4 traders are perhaps expecting a pullback to emerge, due to H1 supply at 1.2415/1.2386, along with the 1.24 level and H4 trendline resistance.