Introduction
The GBP/USD pair is currently showing signs of consolidation after a prolonged downtrend. Based on the technical analysis of the H1, H4, and Daily timeframes, there are indications of a potential price reversal. This article delves into the detailed analysis of GBP/USD’s movement, price predictions, and clear trading recommendations to help you maximize trading opportunities.
GBP/USD Analysis on the H1 Timeframe
Trend
On the H1 timeframe, GBP/USD is in a consolidation phase with a sideways movement. The 9-period SMA (Simple Moving Average) shows the price moving below the MA line, indicating short-term bearish pressure.
Support and resistance
- Nearest support: 1.2550
- Nearest resistance: 1.2580
Technical indicators
- Stochastic RSI indicates an oversold condition (below the 20 level), suggesting a high potential for a price reversal upward.
- Volume remains steady, with no significant spikes signaling a breakout.
GBP/USD Analysis on the H4 Timeframe
Trend
On the H4 timeframe, the main trend remains bearish, with the price trading below the 9-period SMA. However, signs of weakening selling pressure are apparent, as technical indicators begin to show bullish divergence.
Support and resistance
- Key support: 1.2500
- Strong resistance: 1.2588
Technical indicators
- Stochastic RSI is approaching overbought levels (near 80), indicating that short-term upside momentum might be limited, with the possibility of a correction before continuing the bullish trend.
GBP/USD Analysis on the Daily Timeframe
Trend
On the Daily timeframe, GBP/USD is still in a downtrend, but selling pressure appears to be easing. The price is approaching the strong support level at 1.2500, which has been tested multiple times over the past weeks.
Support and resistance
- Major support: 1.2500
- Key resistance: 1.2630
Read: How to identify support and resistance
Technical indicators
- Stochastic RSI is also in the oversold zone, supporting a potential long-term price reversal.
- Selling volume is declining, indicating weakening bearish momentum.
GBP/USD Price Predictions
Based on the analysis above:
- Short-term (H1): A rebound toward the resistance level at 1.2580 is possible.
- Mid-term (H4): The price is likely to correct before attempting to break the resistance at 1.2588.
- Long-term (Daily): If the 1.2500 support holds, there is a chance for a price reversal toward 1.2630 or higher.
Trading Recommendations
Based on the technical analysis:
- Buy position can be opened at the 1.2550 level.
- Take profit (TP): 1.2588 (short-term) and 1.2630 (long-term).
- Stop loss (SL): 1.2520 to limit risk.
Rationale:
- The Stochastic RSI on both H1 and Daily indicates oversold conditions, supporting the possibility of a price reversal.
- The 1.2500 support level is a significant psychological area.
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