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Home ANALYSIS

GBPUSD takes one technical step higher, but stalls ahead of the next step

A.R Chowdhury by A.R Chowdhury
March 16, 2022
Reading Time: 4 mins read
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GBPUSD takes one technical step higher, but stalls ahead of the next step

GBPUSD

GBPUSD trade between the 100/200 hour moving averages

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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
had found sellers near its 100 hour moving average on the last two tests (see blue line in the chart above). Yesterday the price briefly traded above the level but also ran into swing area resistance between 1.3080 and 1.30878 (see post from yesterday HERE). The price backed off into the close.

Today, the buyers pushed up toward the falling 100 hour moving average again and was able to sneak through the falling moving average line (currently at 1.3058). In the early North American session, the price moved up to a intraday high of 1.31047. That was just short of the falling 200 hour moving average currently at 1.31107. The price has not traded above its 200 hour moving average since February 23 when it broke below that moving average at 1.3576 (the 200 hour moving average 465 pips from that level now).

So although one step was taken above the 100 hour moving average and you can argue another step was taken above the swing area at 1.3080 to 1.30878, the next step above the 200 hour moving average 1.31107 has not been able to be taken. A battle between the moving averages is on. Traders will look for the next shove.

That shove may have to wait until the FOMC decision at 2 PM ET.

On a break of the 100 hour moving average, recall the low from yesterday stalled right around the natural support at 1.3000. The low price reached 1.29993 (close enough). On the topside, a break of the 200 hour moving average would next target 1.3143 area. Swing lows and highs come in near that level. Above that would be the highs from last Wednesday and Thursday between 1.3188 and 1.31945. Back above that and the 38.2% retracement of the move down from the February 18 high comes in at 1.32448.

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A.R Chowdhury

A.R Chowdhury

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