GBP/USD is just chillin’ around 1.2900, unable to make up its mind.

Sellers tried to take control, but they couldn’t quite get the job done, failing to shut the day below 1.2900. Still, the bullish momentum is looking a bit meh.

Wall Street banks are betting that the British pound will extend its winning run, driven by a resilient economy and hopes for political stability.

The pound has been the best-performing major developed market currency this yr, climbing 1.7% against the dollar to $1.29 and nearly 3% against the euro. 💪

Labour’s election victory has raised optimism amongst investors, and analysts forecast the pound will reach $1.35 by March next yr.

Fundamentals sound great, but what in regards to the technicals?

Welcome to TA of the Day (TAOTD)! 👋

Here’s the day by day chart:

GBP/USD 1D Chart by TradingView

📈 Technical Evaluation of GBP/USD Every day Chart

Using technical evaluation concepts covered in our forex course, let’s analyze GBP/USD.

Easy Moving Averages (10, 50, 200):

• 10-period SMA: Positioned around 1.29444. The worth is currently below this level, indicating short-term bearish momentum. The slope is upward, suggesting recent short-term strength.
• 50-period SMA: Positioned around 1.27689. The worth is above this level, indicating medium-term bullish momentum. The slope is upward, reinforcing medium-term strength.
• 200-period SMA: Positioned around 1.26191. The worth is well above this level, indicating long-term bullish momentum. The slope is upward, suggesting sustained long-term bullishness.

When you’re recent to moving averages read our School of Pipsology lessons on trading moving averages.

Relative Positioning of Moving Averages:

• The 10-period SMA is currently above the 50-period SMA, indicating that the value has been increasing more rapidly within the short term than within the medium term. This is taken into account a bullish signal, indicating that the trend is more likely to proceed upward within the short term.
• The 50-period SMA is above the 200-period SMA, indicating that the value has been increasing more rapidly within the medium term than in the long run. This is taken into account a bullish signal, indicating that the trend is more likely to proceed upward within the medium to long run.
• The worth being above ALL these SMAs suggests strong bullish momentum across different time frames.

Keltner Channel (KC)

• Keltner Channel: The upper band is at 1.29838, the center band is at 1.28634, and the lower band is at 1.27431. The worth is currently near the center band, suggesting that it’s inside the traditional trading range.

When you’re recent too Keltner Channels read our School of Pipsology lessons on learn how to use Keltner Channels.

RSI:

• RSI (14): The present reading is 58.22. That is within the neutral-to-bullish zone, suggesting that the market has a slight bullish bias but shouldn’t be overbought.

When you’re recent too RSI read our School of Pipsology lessons on learn how to use RSI.

🕵️ Key Observations

Price Motion:

• Uptrend: The worth has been in an uptrend since early June, characterised by higher highs and better lows.
• Pullback: Recently, the value reached a high around 1.3044 before pulling back barely. It’s currently trading around 1.29070, showing some consolidation after the recent upward move, and is currently searching for support.

Support and Resistance Levels:

• Support: Immediate support is around 1.28634 (middle Keltner band) and 1.27689 (50-period SMA).
• Resistance: Immediate resistance is around 1.29838 (upper Keltner band) and 1.3044 (recent high).

Moving Averages:

• The ten-period SMA is currently acting as immediate resistance, while the 50-period SMA provides a stronger medium-term support.

RSI:

• The RSI being within the neutral-to-bullish zone suggests a slight bullish bias, but there’s room for each upward and downward movement.

Market Structure:

• Recent Swing Lows and Highs: The worth has been making higher highs and better lows after forming a swing low on April 19, confirming a bullish structure. The chart shows higher lows around 1.2700 in late June and better highs above 1.3000 in mid-July, followed by a recent low around 1.2850.
• Break of Structure (BoS): A big BoS occurred above the previous swing high at 1.2893 in early March,  indicating a continuation of the uptrend and reinforcing the bullish momentum.
• Change of Character (ChoCh): A ChoCh could be observed if the value breaks below the recent higher swing low at 1.2299, indicating a market structure shift from bullish to bearish.

🤔 Potential Trade Scenarios

Is GBP/USD a buy or sell?

The next trade scenarios are provided solely for educational purposes. Since they don’t include full risk management practices, they are usually not intended to function actual trade recommendations, but merely food for thought to enable you to generate your individual trade idea.

Long Bias:

• Consideration Point: Consider entering a protracted position if the value finds support near 1.28634 and shows signs of a bounce, similar to a bullish candlestick pattern or a positive divergence within the RSI. Moreover, a break above the resistance level at 1.29838 and 1.3044 would indicate a continuation of the uptrend.
• Invalidation Point: Consider setting a stop-loss below the support level of around 1.27689 to administer risk.
• Potential Goal: Search for a move towards 1.3100 and better if the uptrend resumes.

Short Entry

• Consideration Point: Consider entering a brief position if the value fails to interrupt above the resistance level at 1.29838 and shows signs of bearish momentum, similar to a robust bearish candlestick pattern or the RSI moving below 50.
• Invalidation Point: Consider setting a stop-loss above the recent high at 1.3000 to administer risk. This level is crucial as a break above it could invalidate the bearish setup.
• Potential Goal: Initial goal might be the support level around 1.28634. If bearish momentum continues, search for further downside towards 1.27689 or lower.

📝 TAOTD Summary

• Trend: The long-term trend appears to be bullish with a series of upper highs and better lows, however the short-term trend shows some resistance across the 10-period SMA.
• Key Levels: Immediate support at 1.28634 and resistance at 1.29838.
• Momentum: The RSI indicates a slight bullish bias but suggests room for each upward and downward movement.
• Market Structure: Recent BoS indicates a continuation of the bullish trend, while monitoring for potential ChoCh is crucial for determining future price motion. The subsequent BoS would occur if the value breaks above the recent swing high of 1.3044,  indicating further continuation of the uptrend.
• Moving Averages Evaluation: The upward slopes on the 10-period, 50-period, and 200-period SMAs indicate strong bullish momentum across different time frames.