FX.co ★ Analysis for GBP/USD, January 28

Hi, dear traders!

Following the results of yesterday's trading, bears took control over the pound/dollar pair. So, it ended the trading session with a decline. The closing price of the session on January 27 was at the level of 1.3684, which was lower than the strong technical level of 1.3700 mentioned more than once. Market participants factored in the Fed's decision to keep rates unchanged near 0.00%-0.25%, as well as Jerome Powell's remarks. Many traders opened long deals on the US currency. Although, to be honest, we have not heard anything new from the Fed Chairman. The results of the FOMC meeting were in line with expectations. You can learn more about this by reading today's article on the euro/dollar pair. I assume that the main impact on the quotes was the difficult situation with COVID-19 in the UK and the technical indicators.

Daily

As clearly seen on the daily chart, the GBP/USD pair was supported by the red line of the Ichimoku Tenkan indicator for quite a long time. At the moment of writing this article, the bears are again testing this level for a breakout. If today the pair closes the trading session below the Tenkan line, bears may take the upper hand. They may push GBP/USD to the level of 1.3600 – its lowest level seen on January 26. The bears' longer-range targets are in the 1.3530-1.3518 area, where the Kijun blue line is located and another strong support level of 1.3518. These are the lows of January 18. While writing the analysis, the selling pressure on the British pound was increasing but the Tenkan line was withholding it rather successfully. Now, looking at the daily timeframe, it is difficult to predict the further movement of the pair. Perhaps the bulls will take control of the pair and begin to recoup the current losses, or even finish today's trading for GBP/USD with growth. This can be seen only after the closing of today's session and the candle that eventually appears on the daily chart.

H4

On this chart, the pressure on the pound sterling is clearly visible. The pair has already dropped by 50 points on the moving average. Now it is falling below the 89 black exponential moving average. If the downward movement continues, the next target for bears will be the area of 1.3610-1.3600. If there are bullish reversal patterns of candlestick analysis on the chart, we may consider opening long deals on the pair. Long positions at lower and more favorable prices should be opened if the pair hits the area of 1.3558-1.3518. Here the orange 200 exponential moving average passes above the support level, which can halt the fall of the quote and push it higher. However, even in this case, it is recommended to wait for the support of the corresponding Japanese candle models for growth. The main event of today's day will be the preliminary data on US GDP for the fourth quarter of last year. Perhaps, these statistics will make their own adjustments to the price movement of the GBP/USD pair and somehow affect the current technical indicators.

Good luck!