Technical Analysis of GBP/USD for February 15, 2024

GBP/USD Still Under The Pressure After The GDP Data Disappoints

Recent economic data and technical indicators have significantly influenced the GBP/USD currency pair. The UK's preliminary Q4 GDP data and technical analysis from the H4 and H1 time frames provide a comprehensive understanding of the pair's current and future movements. This article delves into these aspects to offer insights into the GBP/USD dynamics.

Key Takeaways:The UK's weaker-than-expected Q4 GDP data suggests a technical recession, affecting GBP/USD movements.Technical indicators, including candlestick patterns and moving averages, show a bearish trend in GBP/USD.The article provides scenarios for both bullish and bearish outlooks, emphasizing the importance of risk management in trading.

Fundamental Analysis:

The UK's Q4 GDP showed a contraction of 0.3% quarter-on-quarter, more significant than the expected 0.1% decrease. This marks a continuation of the economic downturn, as the year-on-year GDP also fell by 0.2%, indicating the weakest annual change since 2009, excluding the Covid pandemic period. These figures have reaffirmed a technical recession in the UK during the latter half of 2023, potentially influencing the Bank of England's monetary policy decisions.

Technical Analysis:

The GBP/USD pair has been exhibiting bearish tendencies on both H4 and H1 time frames. Key observations include:

A Bearish Engulfing pattern at the 1.2691 level, signaling a strong seller's market.A break below the short-term trendline support, with a local low formed at 1.2543.The price is trading below key moving averages (EMA 100 and DEMA 50), indicating sustained bearish momentum.The RSI is hovering around 39.13, suggesting a bearish outlook but nearing oversold conditions.Market Sentiment and Indicator Signals:

The general sentiment on the scoreboard is bullish (57% vs.43% bears). Last week sentiment is bullish as well (53% bulls vs.47% bears) and the last three days sentiment switched to bearish (45% bulls vs.55% bears).

- 15 out of 23 technical indicators are showing Sell signal, 2 are showing Buy signal and 6 indicators are Neutral

- 18 out of 18 moving averages are showing Sell signal

Bullish Scenario:If the price forms a solid bullish reversal pattern, such as a larger bullish engulfing or multiple bullish candlesticks, and breaks back above the DEMA 50 and EMA 100, it could suggest a reversal and a potential move towards the previous trendline or higher resistance levels.An RSI reversal back above the 40-50 mid-range could also indicate returning buying pressure.Bearish Scenario:If the price continues to sustain below the DEMA 50 and EMA 100 and the RSI remains weak or falls further, this could indicate ongoing selling pressure with potential targets at lower support levels.A continued series of bearish candlestick patterns could reinforce the downtrend, pushing the price towards the chart's marked minimum or even lower.Conclusion:

Traders should watch the reaction of the price to the moving averages (DEMA 50 and EMA 100) and the RSI for indications of the market's direction. The recent break of the trendline and the presence of bearish engulfing patterns suggest caution for bulls. Conversely, any sign of a bullish reversal near oversold conditions could provide a scenario for a potential recovery. Risk management, including the use of stop-loss orders, is essential due to the inherent volatility in the forex market.

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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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