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Market Outlook
GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!

GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!

12-01-2022 08:57

GBPUSD Skyrocketed Since December, Can the Long-Term Downtrendline Hold It?

The British currency, Pound sterling, continues to strengthen amid the strengthening of the American economy which is also strengthening. Where the Fed will soon increase interest rates and the realization of tapering policies. Indeed, even though fundamentally the Fed's policy is very hawkish for the USD, there are still Omicron problems that continue to run rampant in Uncle Sam's country. Recently, cases of Omicron increased dramatically by 3 times in New York. This of course makes investors more conservative and moves their capital to safer and more profitable places, for example the UK, which only increased its interest rates last December. No doubt, this phenomenon has made GBPUSD skyrocket to 450 pips since last December.

Quick Recap on GBP/USD

GBPUSD shows a very bullish sentiment for the short to medium term. But in the big picture, it is still in an uncertain area of consolidation.

Let's dive in a little deeper to see how GBP/USD fare on multiple timeframes:

GBP/USD Monthly Technical Analysis

GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!
Graph taken from TradingView.

The monthly timeframe for GBPUSD is seen in correction after rejecting the monthly resistance created since January 2018 at 1.42300. However, the December candle managed to close bullish after jumping from the 50 MA line. Now, the January candle is ready to go higher after crossing the highest level last December.

GBP/USD Weekly Technical Analysis

GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!
Graph taken from TradingView.

On the weekly timeframe, GBPUSD managed to close bullish three times in a row. It seems that this week's candle will also close bullish in the next 2 days. Since breaking the key level area at 1.33550 in the third week in December, GU continues to shoot and looks ready to move towards the weekly resistance at 1.37500 which is in line with the 50 MA line.

GBP/USD Daily Technical Analysis

GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!
Graph taken from TradingView.

We can draw a down-trendline on the daily timeframe of GBPUSD which was created since July 2021. This trendline managed to hold the GBPUSD up three times, namely in July, September, and October 2021. GU will soon try to test the strength of this trendline for the fourth time. Keep in mind that there is a 200 MA line from the daily timeframe which is slightly above the trendline which might add to the burden of GBPUSD's incline.

Trading idea for GBP/USD

GBPUSD In A Strong Bullrun, Approaching Long-Term Trendline!
Graph taken from TradingView.

On the H4 timeframe, we can identify the ascending channel for GBPUSD, where the pair seems to be heading to the top of the channel that confluence with the daily trendline that we discussed earlier.

Order: Sell Limit
Entry: 1.36800
Stop Loss: 1.37500
Target 1: 1.35950 (50% + BE)
Target 2: 1.34590 (25%)
Target 3: 2.33550 (25%)
Risk total: max 1% Equity (High Risk Setup)
Reason: Top ascending channel area, confluence with Down-trendline and H4 resistance.

ZFX Analyst’s Predictions

The British economy continued to strengthen after the Bank of England increased interest rates from 0.1% to 0.25% in December. Not inferior to Britain, the United States will soon increase its interest rates up to 3x in 2022 to overcome the problem of inflation which is quite worrying. The Fed's policy of tapering also seems to be realized in the near future. With CPI data to be released in the New York session later, there is a possibility that the price may take liquidity in the key H4 area to fall further, correcting the rise in GBPUSD since last December.

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Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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