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British Pound Technical Analysis - GBP/USD. Trend to Resume or Reversal For Sterling?


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BRITISH POUND, GBP/USD - TALKING POINTS

  • GBP/USD bounced back after making a new low for the year
  • The Pound has seen increased volatility as it looks to hold ground
  • Will Sterling continue to be undermined and make fresh lows again?
How to Trade GBP/USD

GBP/USD TECHNICAL ANALYSIS

GBP/USD has recently moved lower toward a descending trend-line.

The price moved under the lower band of the 21-day simple moving average (SMA) based Bollinger Band for the second time in November.

Since July, this is the sixth time GBP/USD has done this. The observation here is the price closing outside the lower Bollinger Band. Once the price then closes back inside the Bolling Band, there might be some bullishness evolve.

When this observation occurred in July and August, GBP/USD appreciated in the following few weeks. However, the first time this event happened in September, GBP/USD depreciated and then traded outside of the lower band again. On the second occasion in September when the close went below and then back inside the band, GBP/USD appreciated.

In early November, the price closed outside the lower band and then closed inside the band before depreciating further. This happened for the second time in November at the end of last week.

The Bollinger Bands widened notably on the recent moves, illustrating increasing volatility.

The price action on Friday also developed a bullish Engulfing candlestick pattern. The pattern involves two candles with the second candle completely engulfing the ‘body’ of the previous red candle.This occurs when the open is below the close of the previous day and the close is above the open of the previous day. This was observed after the close on Friday.

A key component to looking at technical indicators is to ensure that robust Risk Management techniques are also employed. It should be noted though that past performance is not indicative of future results.

The recent low at 1.3354 and the descending trend line, currently dissecting at 1.3300, could provide support.

On the topside, the previous highs at 1.3607 and 1.3835 may offer resistance. In between those levels there is the 21-day SMA currently at 1.3618, a pivot point at 1.3710 and a descending trend line presently at 1.3760, that are potential resistance levels.

GBP/USD CHART

Chart created in TradingView

Written by Daniel McCarthy, Strategist for DailyFX.com. 16th November 2021
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11 hours ago, TradeLikeMrMike said:

I like trading the GBP/USD.... I agree it might be moving back up...

Hi @TradeLikeMrMike

What type of trader are you? Scalper, day trader, swing trader, position trader, algorithmic trader or event-driven trader ?

What markets do you trade and mostly interested in to trade?

If you don't mind, please share your routine when it comes to your trading analysis.

 

All the best - MongiIG

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Hi MongiIG,

I would call myself a scalper to short term trader. I like to get in and out markets as soon as I can. I don't have the paitence nor the fortitude to sit through long hours of losses.  I used to scan the Forex Market & put in trades here and there but would lose track and lose money. I have started trading again this fall due to being at home recovering from knee surgury & decided to try again. Right now I am just focused on one currency - GBP/USD and making one or two trades a day. I focus on the NY time frame. From 6 am CST to 11 am CST.. I have developed a simple short term/scalping strategy that is helping make some profits now. I am slowly and steadily recuperating money I have lost and taken out of the account. As far as trading analysis, I follow Forex Factory, Market Milk, and various Currency Strength Meters. I try to catch reversals as I can....

  • Like 1
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16 hours ago, TradeLikeMrMike said:

Hi MongiIG,

I would call myself a scalper to short term trader. I like to get in and out markets as soon as I can. I don't have the paitence nor the fortitude to sit through long hours of losses.  I used to scan the Forex Market & put in trades here and there but would lose track and lose money. I have started trading again this fall due to being at home recovering from knee surgury & decided to try again. Right now I am just focused on one currency - GBP/USD and making one or two trades a day. I focus on the NY time frame. From 6 am CST to 11 am CST.. I have developed a simple short term/scalping strategy that is helping make some profits now. I am slowly and steadily recuperating money I have lost and taken out of the account. As far as trading analysis, I follow Forex Factory, Market Milk, and various Currency Strength Meters. I try to catch reversals as I can....

Hi @TradeLikeMrMike

Awesome, thanks for sharing. Glad to hear you are making some profits from your trades.

Happy trading going forward with your trading journey and looking forward to seeing your posts and sharing your analysis on GBPUSD (technical or fundamental analysis).

All the best - MongiIG

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  • 2 weeks later...
On 18/11/2021 at 17:01, TradeLikeMrMike said:

Hi MongiIG,

I would call myself a scalper to short term trader. I like to get in and out markets as soon as I can. I don't have the paitence nor the fortitude to sit through long hours of losses.  I used to scan the Forex Market & put in trades here and there but would lose track and lose money. I have started trading again this fall due to being at home recovering from knee surgury & decided to try again. Right now I am just focused on one currency - GBP/USD and making one or two trades a day. I focus on the NY time frame. From 6 am CST to 11 am CST.. I have developed a simple short term/scalping strategy that is helping make some profits now. I am slowly and steadily recuperating money I have lost and taken out of the account. As far as trading analysis, I follow Forex Factory, Market Milk, and various Currency Strength Meters. I try to catch reversals as I can....

Hi @TradeLikeMrMike

See below British Pound forecast:

 

All the best - MongiIG

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