Technical Analysis of GBP/USD for January 2, 2024

Analyzing Key Signals in the GBP/USD Currency Pair

As of January 2, 2024, the GBP/USD pair has been testing critical support levels. The pair touched the intraday low at 1.2700, with bearish pressure suggesting possible further declines to 1.2675 (100 EMA) and 1.2615. The momentum indicates that bears currently have the upper hand in the market.

- DEMA (50 Close): 1.2749.

- EMA (100 Close): 1.2675.

Relative Strength Index (RSI):

- The RSI reads at 44.63, suggesting a balanced market with potential for both upward and downward movements.

The recent 'Bullish Engulfing' pattern is crucial. If the GBP/USD stays above key support levels and the DEMA, it might signal a recovery. However, a break below the 100 EMA could tilt the market towards further bearish trends.

Weekly Pivot Points:

- Resistance Levels: WR3 - 1.28261, WR2 - 1.27709, WR1 - 1.27522.

- Pivot Level: 1.27157.

- Support Levels: WS1 - 1.26970, WS2 - 1.26605, WS3 - 1.26053.

On the weekly chart, a Bullish Engulfing pattern emerged post-breakout above 1.2340, indicating bullish dominance. The market trading above the 50 WMA and 100 WMA sets the next bull target at the 2023 high of 1.3141. On the contrary, a sustained drop below 1.1802 raises the likelihood of a significant bearish trend, potentially down to 1.1494.

- Majority (17 out of 21) technical indicators signal 'Sell'; 4 remain Neutral.

- All 18 moving averages signal 'Sell'.

- General sentiment is bullish (57% bulls vs. 43% bears). This bullish trend continues from last week (60% bulls) and the past three days (58% bulls).

For Bulls:: A sustained position above key support levels could indicate an ongoing recovery. Keep an eye on the resistance levels for signs of a bullish continuation.

For Bears: Watch for breaks below support levels, especially the 100 EMA, as this could signal further declines.

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

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