1.2870/1.2850 holds an interesting collection of resistances...

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red). This, along with trendline resistance (2.1161), remains a well-rounded resistance area to keep an eye on long term.

In recent months, we’ve seen a recovery form off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high.

February traded firmly in the red, down 2.95%.

Daily timeframe:

Demand formed at 1.2649/1.2799 entered view in the later stages of the week, refreshing multi-month lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019), and is potentially confirmed by a familiar RSI channel support.

The 200-day SMA also resides within the current demand zone, circulating around 1.2693.

North of price we have a local trendline resistance (1.3514), with supply seen at 1.3303/1.3184 in the event we travel further north this week.

H4 timeframe:

Friday witnessed sterling soften through an area of demand at 1.2806/1.2833, recording fresh YTD lows at 1.2725, and rebounding from 1.2718/1.2751, an area comprised of 161.8% Fibonacci ext. studies. This area is also housed within current daily demand.

1.2806/1.2833 may offer the market a platform of resistance this week, having seen its history as an area of support. In the absence of this, follow-through buying to relatively dominant supply at 1.2868/1.2894 is possible.

H1 timeframe:

Uncertainty surrounding Brexit developments weighed on sentiment Friday; the EU laid out its trade mandate followed by UK PM Johnson setting his stall and the two sides remaining divided on key red lines.

The response from 1.2718/1.2751 on the H4 timeframe, coupled with support forming off 1.2750 on H1, pulled GBP/USD north of 1.28 and back into a descending channel formation (1.3008/1.2860). Technically, 1.2850 offers a particularly attractive area of resistance, bolstered by nearby channel resistance (1.3008), a trendline support-turned resistance (1.2849), a 61.8% Fibonacci retracement at 1.2861 and a 50.0% retracement at 1.2870.

Direction:

Longer term:

Daily demand at 1.2649/1.2799 could hold price higher this week, reinforced by the 200-day SMA.

Shorter term:

While longer term we’re trading from demand, should a retest at the underside of 1.2870/1.2850 on the H1 occur, particularly around the yellow zone, intraday shorting opportunities could be present, with 1.28 resting as the initial target.

Before 1.2870/1.2850 makes an appearance, traders may find 1.28 is retested as support. Given we’re coming from daily demand, bullish themes off 1.28 could also be an option.