FX.co ★ Technical Analysis of GBP/USD for January 4, 2024

GBP/USD Fundamental Insights and Key Technical Levels

Key Takeaways

1. Economic Data's Influence: Today's economic releases, especially from the EU and US, are pivotal in shaping GBP/USD trends.
2. Technical Rebound: The pair's rebound off the 1.2608 support hints at underlying bullish momentum, despite current resistance levels.
3. Market Sentiment: The bullish sentiment aligns with technical indicators, suggesting a potential continuation of the uptrend.

Morning Brief: Economic Indicators in Focus

Today's economic calendar is packed with crucial data. Inflation figures from Germany and France are set to reveal year-on-year increases, hinting at broader EU trends. Also, the final PMI data for services across Europe, particularly in France and the UK, will provide further market insights.

US Labor Market: A Key Driver

Later, the focus shifts to the US with the release of labor market data. The ADP report, a precursor to the non-farm payroll, is expected to confirm market stabilization, impacting USD dynamics.

GBP/USD Technical Outlook: Resistance and Support Dynamics

The GBP/USD pair had bounced from the key short-term technical support level located at 1.2608 and is heading higher as the bulls are making pressure on the market. The instraday technical support is seen at 1.2608 and the intraday technical resistance is seen at 1.2670 (EMA) and 1.2699. The momentum on the H4 time frame chart is weak and negative, but soon the neutral level of fifty should be tested. Any breakout higher above the level of 1.2699 would change the short-term outlook back to bullish.

Intraday Indicator Signals: A Mixed Picture

• Majority of technical indicators favor a Buy signal.
• Moving averages present a divided outlook, with nearly equal signals for Buy and Sell.

Market Sentiment: A Bullish Bias

The sentiment is predominantly bullish, with a noticeable shift towards this stance in the past three days. This trend aligns with the recent technical bounce.

Pivot Points: Crucial Levels to Watch

Weekly pivot points provide key levels for traders. Currently, the pair trades above the weekly pivot, suggesting a bullish inclination.

WR3 - 1.28261

WR2 - 1.27709

WR1 - 1.27522

Weekly Pivot - 1.27157

WS1 - 1.26970

WS2 - 1.26605

WS3 - 1.26053

Trading Outlook: Bullish Engulfing Pattern Emerges

The weekly chart shows a Bullish Engulfing pattern, a strong signal for continued bullish momentum. The market trading above both the 50 WMA and 100 WMA reinforces this outlook. The next target for bulls is the 2023 swing high at 1.3141. Conversely, a break below 1.1802 could herald a significant bearish turn.

Conclusion: Trading Insights for GBP/USD

For bulls, maintaining positions above crucial support levels aligns with the current bullish trend. For bears, a sustained break below key support levels, particularly 1.1802, would indicate a shift towards a bearish market.

Useful Links

• More Artcles
• InstaForex Course for Beginners
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Important Notice

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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