GBPUSD Technical Analysis and OutlookPrevious Observations:
Long-term Downtrend: Confirmed downtrend from mid-2021.
Major Support Breach: Below 1.2000 in late 2022.
Recent Recovery Attempt: Above 1.2400, buying pressure still evident.
Key Resistance Zones (1h): Current level @ 1.2450
Key Resistance Zones (4h): 1.2500-1.2600.
Key Support Zones (Weekly): 1.2000 and 1.1800 - There's room to keep pushing lower.
Potential Buying Climax (Daily, 4h, 1h): Steepness of recent rise hints at possible pullback.
Additional Bearish Confirmations for Potential Shorts :
- Price tested and bounced off the 200 EMA several times in Dec 2024 (4h).
- The pair is currently hovering around the 50% retracement level of the recent short-term decline, a common area for price reversals.
- Bearish divergence confirmations have already presented this week on the hourly time frame. This is a tell-tale sign of institutional orders being filled at specific levels and generation of further supply. (This may be the conclusion of a 'PHASE C' in a redistribution cycle).
- The dollar shows no signs of weakening against the GBP both in technicals as well as fundamentals (Recent data shows the U.S. economy added 256,000 jobs in December, surpassing forecasts and reinforcing a strong dollar narrative).
Conclusions:
Considering that we see a trendline breakout followed by strong bearish reactions which are ideally happening at HTF supply levels, we can assume that the fractal nature of the markets will play out accordingly. We should not ignore the fact that price has reacted from LTF demand or that we saw a recent bullish imbalance filled- entering shorts off the current supply level should only be done with sufficient confirmations (we may have to look at how the London session open influences price action).
Disclaimer:
This analysis is for informational purposes only and should not be considered financial advice. Trading involves significant risk, and it's essential to conduct your own thorough research and analysis before making any investment decisions. Past performance is not indicative of future results. Always use appropriate risk management techniques and trade responsibly.
