FX.co ★ Trading plan for GBPUSD on July 12, 2022

Technical outlook:

GBPUSD dropped towards the 1.1800-05 fresh swing lows during the European session on Tuesday before pulling back higher. The currency has rallied over 70 pips in the past few hours and is trading close to 1.1875 at this point in writing. Bulls are looking poised to come back in control and push the price higher towards the 1.2056 initial resistance to confirm a bottom in place.

GBPUSD has remained in control of bears since January 2021 after hitting the 1.4250 high as seen on the daily chart here. It has successfully carved a larger-degree meaningful downswing between 1.4250 and the 1.1800-10 area and now seems ready to turn higher again. Please note that the entire drop has been corrective, consisting of three waves. Hence, there is a high probability of a push above 1.4250.

GBPUSD bulls are drawing a pin bar/hammer candlestick pattern on the daily chart. If successful, the high probability remains for a bullish trend reversal from here. Immediate price resistance is seen at 1.2050, followed by 1.2300-2400 while interim support is at around the 1.1800-10 area respectively. Only a break below 1.1800 will bring bears back into the stage and delay matters further.

Going forward:

GBPUSD might have completed a larger-degree complex corrective wave between 1.4250 and 1.1800-10. Prices are finding support from just below the Fibonacci 0.786 retracement of the larger-degree upswing between 1.1400 and 1.4250. If the suggested structure holds well, bulls will be back in control from here pushing prices through 1.2300-2400 in the near term.

Trading plan:

Potential rally towards 1.2300 and 1.2600 against 1.1700

Good luck!