News & Analysis

Chart of the Day: Tuesday 25th August

August 25, 2020

GBPUSD – Daily

GBPUSD (Daily)

For today’s Chart of The Day, we are looking at Cable on the daily time frame. After several days of tight consolidation following an impulsive move higher, GBPUSD forms a bullish flag candle pattern and could be about to break higher.

The impulsive move mentioned occurred last month in July when the price rose from 1.28 to the 1.31 region, and within this movement, we have a few clues as to what may be driving this market from a technical perspective.

Firstly, it’s worth highlighting the significance of the 1.28 level in terms of key support for the pair. Before the price fell through the floor back in March, this level acted as a strong base for Cable and became a significant 61.8% retracement zone from the Nov 2019 high of 1.35 and the most recent low in March of 1.14. Initially, this area acted as resistance but can now be considered a line in the sand for GBPUSD. Should 1.28 be tested again and fail, then the price may tend to drift even lower.

Now with the critical support highlighted, we can look at the current bullish activity and discuss the bullish flag formation. It appears buyers in this market are still firmly in the driving seat and waiting for an opportunity to push higher. We see sizable resistance situated at 1.32, but I suspect a confident break above could see the fruits of this latest pattern test targets towards the 1.35 mark upwards.

Much will depend on just how much of a risk appetite Sterling buyers have in this current environment in the coming days. Still, given how much Dollar volatility we’ve seen of late, the opportunity that buyers are waiting for could be just around the corner.

By Adam Taylor CTEe

.@adamt_trading

Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg

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