FX.co ★ Technical Analysis of GBP/USD for January 17, 2024

GBP/USD bounce strongly after CPI data release

The technical analysis of GBP/USD for January 17, 2024, suggests a complex and dynamic market environment, influenced by recent UK economic data and technical indicators.

Key Economic Influences:

• UK CPI Data: Higher-than-expected inflation figures have provided significant momentum to the GBP. The data includes:
  • Yearly CPI at 4.0%, surpassing expectations of a drop to 3.8%.
  • Monthly CPI increase of 0.4%, against an expectation of 0.2%.
  • Core inflation steady at 5.1% yearly, defying expectations of a decline to 4.9%.
  • Producer Price Index (PPI) showing deeper deflation at -2.8% yearly.
• Market Interpretation: These figures suggest a slower transition to interest rate cuts, indicating sustained inflationary pressure. This context has contributed to the strengthening of the GBP against the USD.

Technical Analysis – H4 Time Frame:

• Current Market Position: The pair has rebounded from 1.2599, now testing resistance at 1.2674.
• Momentum: Indications of a potential shift from oversold conditions, with bulls temporarily dominating.
• Key Levels: A breakout above resistance and the 50 level on the Relative Strength Index (RSI) is crucial for continued bullish movement, targeting 1.2692 next.

Trendline & Support Analysis:

• Trendline: A blue ascending trendline suggests an overall uptrend, but a recent break below this line hints at a possible reversal or retracement.
• Support: A key short-term support level is marked, showing resilience as the price bounces back from it.

Moving Averages and Candlestick Patterns:

• Moving Averages: Price below the 100-period EMA and 50-period DEMA, suggesting short-term bearish momentum.
• Candlestick Patterns: Bullish engulfing patterns and pin bars at support areas indicate potential for reversal or rally.

H1 Intraday Indicator Signals:

• Technical Indicators: Mixed signals with 12 indicating Buy, 6 Neutral, and 4 Sell.
• Moving Averages: An even split between Buy and Sell signals among 18 moving averages.

Market Sentiment:

• Overall Sentiment: Bullish bias (58% bulls vs. 42% bears).
• Weekly Sentiment: Slightly less bullish than last week (55% bulls vs. 45% bears).
• Recent Sentiment Shift: Last three days show a bearish tilt (45% bulls vs. 55% bears).

Weekly Pivot Points:

• Notable levels include WR3 at 1.28232, WR2 at 1.27864, and WS3 at 1.26760.

Trading Insights and Strategies:

• Bullish Scenario:
  • Entry: Post-confirmation of bullish patterns near support, or closure above 100 EMA and 50 DEMA.
  • Stop Loss: Just below recent low at support.
  • Take Profit: Near recent high or at 1.2750.
• Bearish Scenario:
  • Entry: On a retest of the broken trendline or moving averages from below.
  • Stop Loss: Above the moving averages or recent high.
  • Take Profit: At key short-term support or psychological levels like 1.2500.

This analysis indicates a cautiously optimistic outlook for GBP/USD, with a keen eye on breaking above key technical levels to confirm bullish momentum. Conversely, failure to hold these levels could see a return to bearish sentiment. Always consider market volatility and economic news when trading.

Useful Links

• More Artcles
• InstaForex Course for Beginners
• Open Trading Account

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.

#instaforex #analysis #sebastianseliga