Weekly
This currency pair showed a decline of 0.50% last week, while drawing a reversal model of the "Rickshaw" candle analysis. What is the difference between the "Rickshaw" and "Long-legged Doji" Japanese candlestick reversal patterns? They differ in the size of shadows. In particular, the "Rickshaw" model has approximately equidistant shadows that we see in the last weekly candle of the GBP/USD currency pair. At the same time, both models are often worked out by the market, however, much depends on where exactly such a candle was formed. To do this, let's go back a little to history. In December 2019, an attempt was already made to break through the very strong and important level of 1.3500. Then the pair showed maximum values at 1.3513, after which there was a strong fall to 1.1410. Now the market fell short of the December highs of last year and drew a reversal candle model from 1.3479. This is an important point! I believe that there is a very high probability that the pound has completed its growth and is ready to turn in a southerly direction. So far, this is only an assumption, because it is not correct to draw unambiguous conclusions from one, even if it is a reversal candle.
However, the prospects for strengthening the US dollar and the GBP/USD reversal on Friday became greater. According to the August data on the US labor market, the unemployment rate fell to 8.4% (forecast 9.8%), and the number of newly created jobs in non-agricultural sectors of the US economy amounted to 1 million 371 thousand, slightly falling short of the forecast value of 1400. We were also pleased with the 0.4% increase in wages, although it was expected to be zero in August. If this continues, investors will believe that the world's largest economy will recover from the effects of COVID-19 at a faster pace. This factor will certainly support the US currency, and the position of the US dollar will begin to strengthen across a wide range of markets. However, it is not necessary to look so far, especially since the United States of America will hold presidential elections in the fall, on which a lot will depend in the country itself, and around the world. Let's first try to figure out what awaits GBP/USD this week. Judging by the weekly timeframe, there is a high probability of a decline, the nearest target of which will be the price zone of 1.3150-1.3130. As you can see, there is a 200 exponential moving average, as well as a broken long-term resistance line of 1.5817-1.3184. Although it is better to talk about the truth of the breakdown after three consecutive weekly candles close above this line. Since two have already closed, the current weekly candle and its closing price will be extremely important for determining the further direction of the pound/dollar currency pair. Judging by the current situation on the weekly timeframe, the descending scenario looks like the main one.
Daily
On the daily chart, a lot will depend on the bears' ability to push through the support level of 1.3174. At the moment, the pair is actively moving towards this mark and will probably test it for a breakdown. If today's trading closes at 1.3174, the chances of a further decline will be greater. Do not forget about the bearish divergence of the MACD indicator, which strengthens the implementation of the downward scenario.
In my opinion, the GBP/USD sales look the most optimal according to the trading recommendations, however, it is not reasonable to open short positions at the support level and technically it is not correct. For sales, I offer two options. The first is in the case of a rebound of the pair to the price zone of 1.3200-1.3225 and the appearance of reversal patterns of Japanese candlesticks on the four-hour and (or) hourly charts. Second, we wait for the true breakdown of the support level of 1.3174 on the same timeframes and sell it on the pullback.