Forex Analysis:GBPUSD Target Remains Above 1.2900 Levels

Bottom line:  GBPUSD bullish structure remains intact until prices stay above 1.1414 level…

Bottom line:  GBPUSD bullish structure remains intact until prices stay above 1.1414 levels. Bulls are looking poised to push higher towards 1.2900 levels before producing a meaningful correction lower.

Fundamental Outlook:

FTSE’s would be looking to take cues from the Sovereign Debt ratings by S&P later this week. A negative rating there could sent FTSE lower below 7950 levels. With major indices including Dow Jones, DAX, SPX500 rallying over the last week, it would be interesting to see how long the party could continue.

Singapore’s largest Oil trading firm Hin Leong Trading has filed for bankruptcy protection over about $4 billion debt. Oil prices have taken major hit in the past several weeks since COVID-19 crisis has dented global demand. An agreement reached by OPEC+ members to cut production and the end of price war between Russia and Saudi Arabia has failed to curb price decline. WTI Crude is trading around $15.30 at this point in writing, down almost 16%.

On the COVID-19 crisis, focus now turns on the daunting task of reopening economies after facing shutdown for several week. The worst might be behind us but challenge to avoid a resurgence remains.

Technical Analysis:

GBPUSD remains in control of bulls since 1.1414 lows. It is progressing higher to complete the first impulse wave towards 1.2900 at least. Probabilities remain for an extended rally towards 1.3200 levels, which is immediate price resistance.

Alternately, GBPUSD might drop back towards 1.2100/50 levels to complete a complex correction, before proceeding higher. Also note that 1.2100 is fibonacci 0.382 retracement of previous rally between 1.1450 and 1.2485. High probability remains for a bullish reversal if prices manage to reach 1.2100 mark.

Most traders might be willing to hold long positions taken earlier and also to add further towards 1.2100 levels, with protective stops at 1.1414 and potential targets towards 1.2900 and 1.3200 respectively.

Prepared by

Harsh Japee, Technical Analyst.

 

GBPUSD Chart

 


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