FX.co ★ Technical Analysis of GBP/USD for December 6, 2023

Key Highlights:

• Pound sterling faces a critical test at 1.2572, prompting speculation about an impending breakout.
• Bulls must defend the 1.2571 - 1.2547 zone, a pivotal short-term demand area.
• Weekly time frame signals a bullish stance, supported by a Bullish Engulfing pattern post-breakout at 1.2340.

Technical Market Overview:

The GBP/USD pair is currently testing a pivotal short-term technical support at 1.2572, with potential implications for a breakout. A breach could lead to further downside, targeting subsequent support levels at 1.2558 and 1.2547. The 1.2571 - 1.2547 zone emerges as a critical short-term demand area, requiring vigilant defense by bulls. H4 timeframe indicators reflect weak and negative momentum, with the RSI nearing oversold conditions. A sustained breakout above 1.2726 is essential for a shift to a more bullish outlook, possibly targeting the last swing high at 1.2732.

Weekly Pivot Points:

• WR3 (Resistance 3) - 1.2908
• WR2 (Resistance 2) - 1.2820
• WR1 (Resistance 1) - 1.2766
• Weekly Pivot - 1.2678
• WS1 (Support 1) - 1.2624
• WS2 (Support 2) - 1.2536
• WS3 (Support 3) - 1.2482

Trading Outlook:

The weekly chart displays a decisive Bullish Engulfing candlestick pattern, affirming bullish sentiment post-breakout at 1.2340. Currently above the 50-week moving average (WMA), the market aims for the 100 WMA at 1.2504. Conversely, a sustained break below the critical long-term support at 1.1802 increases the likelihood of a substantial downward movement, potentially targeting 1.1494.

Intraday H1 Time Frame Analysis:

- Out of 21 technical indicators, 17 display a Strong Sell signal, 3 are Neutral, and 1 indicates a Buy signal.

- All 18 moving averages present a Strong Sell signal.

Sentiment Scoreboard:

The overall sentiment leans bullish (58% bulls vs.. 42% bears). Last week's sentiment also remained bullish (54% bulls vs.. 46% bears), with the sentiment over the last three days aligning as bullish as well (55% bulls vs.. 45% bears).

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Important:

The beginners 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 focuses and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.