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Home ANALYSIS

GBPUSD finds sellers near recent swing highs and buyers near 100 hour MA

A.R Chowdhury by A.R Chowdhury
March 21, 2022
Reading Time: 5 mins read
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GBPUSD finds sellers near recent swing highs and buyers near 100 hour MA

GBPUSD

GBPUSD does what it’s supposed to do yesterday. Now what?

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The price action the  GBPUSD 
GBP/USD

The GBP/USD is the currency pair encompassing the United Kingdom’s currency, the British pound sterling (symbol £, code GBP), and the dollar of the United States of America (symbol $, code USD). The pair’s rate indicates how many US dollars are needed in order to purchase one British pound. For example, when the GBP/USD is trading at 1.5000, it means 1 pound is equivalent to 1.5 dollars. The GBP/USD is the fourth most traded currency pair on the forex exchange market, giving it ample liquidity and a low spread. Whilst the spreads of currency pairs vary from broker to broker, generally speaking, the GBP/USD often stays within the 1 pip to 3 pip spread range, making it a decent candidate for scalping. The GBP/USD pair, also informally known as “cable” (due to transatlantic cables being used to transmit its exchange rate via telegraph back in the 19th century) has a positive correlation with the EUR/USD, and a negative correlation with the USD/CHF. Trading the GBP/USDWhilst a lot of traders and even brokers will assert that the best time to trade the GBP/USD is during its most active hours during London and New York, doing so can be a double-edged sword due to the often-unpredictable nature of the pair. Its volatility also fluctuates often, and so what could be a profitable looking strategy one month, may not be so productive in later months. In addition, purely technical traders can really struggle to be consistent with this pair, (i.e. by ignoring fundamentals), due to the unique political nature of the United Kingdom. The recent drama surrounding Brexit has added another layer of uncertainty to this currency pair. With a smooth resolution not in the cards for the foreseeable future, it is clear the GBP/USD will be influenced by any developments and negotiations with the European Union.

The GBP/USD is the currency pair encompassing the United Kingdom’s currency, the British pound sterling (symbol £, code GBP), and the dollar of the United States of America (symbol $, code USD). The pair’s rate indicates how many US dollars are needed in order to purchase one British pound. For example, when the GBP/USD is trading at 1.5000, it means 1 pound is equivalent to 1.5 dollars. The GBP/USD is the fourth most traded currency pair on the forex exchange market, giving it ample liquidity and a low spread. Whilst the spreads of currency pairs vary from broker to broker, generally speaking, the GBP/USD often stays within the 1 pip to 3 pip spread range, making it a decent candidate for scalping. The GBP/USD pair, also informally known as “cable” (due to transatlantic cables being used to transmit its exchange rate via telegraph back in the 19th century) has a positive correlation with the EUR/USD, and a negative correlation with the USD/CHF. Trading the GBP/USDWhilst a lot of traders and even brokers will assert that the best time to trade the GBP/USD is during its most active hours during London and New York, doing so can be a double-edged sword due to the often-unpredictable nature of the pair. Its volatility also fluctuates often, and so what could be a profitable looking strategy one month, may not be so productive in later months. In addition, purely technical traders can really struggle to be consistent with this pair, (i.e. by ignoring fundamentals), due to the unique political nature of the United Kingdom. The recent drama surrounding Brexit has added another layer of uncertainty to this currency pair. With a smooth resolution not in the cards for the foreseeable future, it is clear the GBP/USD will be influenced by any developments and negotiations with the European Union.
Read this Term
yesterday did largely what you might expect it to do – technically at least.

The first move yesterday was lower and that low fell down toward the 100 hour MA (blue line). At the 100 hour MA, buyers leaned as risk could be defined and limited, and the price moved higher. That increases the levels important going forward.

The run back to the upside was able to extend above the high from Friday and a swing area between 1.3185 to 1.3194, but stalled right below the high from last week (Thursday) and another high going back to March 7. Those levels came in at 1.32108 (see green numbered circles). Sellers leaned as the risk could be defined and limited and the price moved back lower into the close. The ceiling increases the levels important going forward

For the day, the GBPUSD pair ended lower on the day, but the price action was down, up and down, and at the extremes, traders leaned (at the high and the low) where risk could be defined and limited.

That brings us to the new trading day.

How would a more bearish move look? (a higher dollar).

Looking at the 100 hour MA (which did hold support yesterday), it is also was near a trendline connecting the lows over the last three trading days. The low comes near 1.31354. Also just above that level is a swing area between 1.3138 and 1.31438.

If the price going lower, it needs to break below that cluster of support (and stay below).

  • The next target would be the 200 hour moving average at 1.31075 (green line in the chart above).
  • Move below that level and the 1.3080 to 1.30878 is the next swing area
  • Followed by the lower extreme area down to 1.2999 (call it 1.3000)

How would a more bullish move look?

  • Get above the 1.3188 to 1.31945 area would be a step in the more bullish direction.
  • Move above that area and the recent highs at 1.32108 becomes the obvious target.
  • Break above that and the 38.2% retracement 1.32448 and
  • the swing area near 1.3271 would be eyed.

Stay between 1.32108 above and the 100 hour MA and other support at 1.31354, and the buyers and sellers are still fighting, without a clear winner taking more control.

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A.R Chowdhury

A.R Chowdhury

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