GBP/USD trades at interesting resistance.

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, a recovery formed off 1.1904/1.2235, clocking highs of 1.3514 in December 2019 and breaking the 1.3380 March 2019 high. The month of February, however, declined nearly 3.00%.

Daily timeframe:

Partially altered outlook from previous analysis –

Demand formed at 1.2649/1.2799 entered view in recent movement, refreshing YTD lows at 1.2725. Traders will note this area held price higher on two occasions, once in October and again in November (2019).

The 200-day SMA also resides within the current demand zone, circulating around 1.2696.

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

H4 timeframe:

Partially altered outlook from previous analysis –

1.2718/1.2751, an area comprised of 161.8% Fibonacci ext. studies, continues to cap downside. This area is also housed within current daily demand.

Thanks to recent upside, price is closing in on supply at 1.2885/1.2921, which houses a 50.0% retracement value within at 1.2897. A break of here could trigger another wave of buying to supply coming in at 1.3023/1.3006.

H1 timeframe:

Sterling was relatively volatile Wednesday, ending the session nearly 60 points higher, or 0.46%, amidst speculation the BoE may follow the Fed.

Technically, though, the candles retested 1.28 and firmed, surpassing 1.2850 and testing around the 1.2870ish region.

As highlighted in Wednesday’s analysis, 1.2850 still offers a particularly attractive area of resistance, bolstered by a trendline support-turned resistance (1.2849), a 61.8% Fibonacci retracement at 1.2861 and a 50.0% retracement at 1.2870. Traders are, however, urged to pencil in the 127.2% Fibonacci ext. point at 1.2888 (brown line), and 1.29, in the event the zone fails and heads for the underside of H4 supply at 1.2885/1.2921.

Structures of Interest:

Daily demand at 1.2649/1.2799 remains a reasonably dominant fixture in this market, with room to continue pursuing higher ground.

While longer term we’re trading from demand, price is testing a confluent area of resistance on the H1 between 1.2870/1.2850, which may hold and send the candles back to 1.28. Also, we’re fading overbought territory on the RSI. The threat of H4 price testing supply at 1.2885/1.2921, however, could see a run through the H1 resistance area, in favour of higher-timeframe structure. Therefore, sellers out of the H1 zone should consider positioning stop-loss orders accordingly.