Good day, dear traders!
The GBP/USD currency pair finished the last five days of trading with a confident and powerful growth, strengthening by 1.80%. At the same time, the closing price of last week was 1.2790, which is very close to the key and very important mark of 1.2800. A little later, we will consider several charts of GBP/USD, but for now, I will share my personal opinion about the US currency. What is happening with the US dollar, namely its decline, does not exactly resemble a corrective movement. It's time to talk about a change in the trend. As far as possible, the very near future will show, and in this regard, a full-fledged meeting of the US Federal Reserve (Fed) stands out, the epilogue of which will be the announcement of the decision on the rate, updated economic forecasts of the Open Market Committee (FOMC), and of course a press conference by Fed Chairman Jerome Powell. I believe that this event will be the most important at the auction on July 27-31, and the future fate of the US dollar will largely depend on it. Of course, this will also affect the results of the closing of July trading.
If we touch on the topic of COVID-19, it still concerns market participants and reduces the appetite for risks. In almost all countries that have experienced the first wave of a new type of coronavirus infection, it is feared that a second wave of pandemics will follow. However, while we are talking about local outbreaks of COVID-19, which are observed in a number of European countries, the US and the UK. In this situation, the British authorities again had to apply two-week quarantine measures for those who arrive in the United Kingdom from Spain. Catalonia, where there was a serious outbreak of coronavirus, including among young people, was the main reason for the UK's decision.
Weekly
Turning to the technical part of this article, let's start with the weekly timeframe, and look at the results of the closing of the last five days. As already noted, the British currency finished trading on July 20-24 with a strong growth. The pound bulls managed to close the weekly session above the 89 exponential moving average (black) and within the Ichimoku indicator cloud. It seems that this is a good springboard for further promotion of the quote in the north direction, where the nearest goal is a strong resistance of sellers at 1.2811, which is already being tested for a breakout.
As you can see, the current weekly trading started with the continuation of the upward movement. If the upward trend players continue to fulfill their mission and close the weekly trades above 1.2811, their next targets will be 1.2970 (the upper limit of the cloud), an important and significant psychological level of 1.3000. Further guidance for possible growth will be the 200 EMA, which passes at 1.3144, as well as the strong technical level of 1.3200.
In order for the market for GBP/USD to come under the control of bears, a reversal model of Japanese candles with the closing price under the lower border of the cloud and 89 EMA is necessary. To be honest, the task is very difficult, and much will depend on the results of the Fed meeting and the press conference of the head of this department. At the same time, it is worth noting that the market reaction can be very ambiguous.
Daily
Despite the presence of two dedicated Doji candles, which can be considered a reversal, market participants ignored these signals and absorbed the designated growth candles. I believe that not the least role was played by the longer lower shadows of both candles, which showed that the market is not eager to decline.
At the moment of completion of this article, the pair breaks through a strong resistance level of 1.2811, where the highs of June 10 are marked. If the breakout of this mark turns out to be true, it is worth trying to buy the British currency on the rollback to it.
H1
However, looking at the hourly chart, we see that the first three consecutive candles closed above 1.2811, and now there is a pullback to the broken level, so it is aggressive and risky to try to buy GBP/USD after falling to the area of 1.2815/10.
If the pair returns under 1.2811, and even more so under 1.2800, and bearish candlestick signals appear on the hourly and (or) four-hour charts when trying to resume the rise, this will become the basis for opening short positions on GBP/USD. And yet, the main scenario, in my opinion, is an ascending one, and the main trading idea is buying. However, as has been repeatedly noted, it is always necessary to consider both options for price movement, especially in the run-up to such an important event as the fed's decision on rates.
In conclusion, I would like to remind you that today at 13:30 (London time), the US will publish data on orders for durable goods. Statistics are important enough to influence the course of trading on the pound/dollar pair, so this fundamental component must be taken into account.
Good luck!