GBPUSD In Bearish Territory

GBPUSD Chart
.27 Mar 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing on GBPUSD

  • Financial instrument: GBPUSD 
  • Timeframe: Daily
  • Session: London
  • Trend: Down
  • Trend Confirmation: Tenkan-sen, Kijun-sen, Kumo, Chikou Span, MACD
  • Momentum: MACD Signal
  • Resistance Levels: 1.26298, 1.26751
  • Support Levels: 1.24655 (Weekly Kijun-sen) 1.20326 (Weekly Senkou Span B)
  • Trading Strategy: Sell below the Kumo, Buy on reversal

High Impact Economic Events

  • Wednesday 12:30 am (GMT): Consumer Price Index y/y (AUD)
  • Thursday 12:30 pm (GMT): Gross Domestic Product m/m (CAD)
  • Thursday 12:00 pm (GMT): Final GDP q/q (USD)
  • Thursday 12:30 pm (GMT): Unemployment Claims (USD)
  • Thursday 02:00 pm (GMT): Pending Home Sales m/m (USD)
  • Thursday 02:00 pm (GMT): Revised UoM Consumer Sentiment (USD)
  • Friday 12:30 pm (GMT): Core PCE Price Index m/m (USD)

GBPUSD Analysis

GBPUSD price chart using the Ichimoku Cloud technical analysis tool.

Senkou Span A and Senkou Span B

Currently, the Senkou Span A is below the Senkou Span B, indicating a bearish bias in the medium term. This suggests that the price might encounter resistance around the Senkou Span A if a recovery attempt occurs. Additionally, the price fell below the Kumo, indicating a downtrend. The Senkou Span A (leading span A) and Senkou Span B (leading span B) form the boundaries of the Kumo Cloud. 

Tenkan-sen and Kijun-sen

As of the latest data, the Tenkan-sen is below the Kijun-sen, indicating a bearish sentiment in the short term. This suggests that sellers have been more active recently, exerting downward pressure on the price of GBPUSD. The recent crossover between the two lines suggests potential profit-taking of any open long positions and an opportunity for initiating short entries. The Tenkan-sen (9-period moving average) and Kijun-sen (26-period moving average) are essential components of the Ichimoku Kinko Hyo indicator. 

Kumo Cloud

As of now, the price of GBPUSD is trading below the Kumo Cloud, reinforcing the bearish sentiment. The Kumo Cloud represents an area of support and resistance. When the price is below the cloud, it indicates a bearish trend, while a price above the cloud suggests a bullish trend. 

Indicators and Oscillators Analysis

  • The 50-period Moving Average confirms the downward bias for the GBPUSD as prices are trading below it.
  • The Moving Average Convergence/Divergence is currently below the zero line, hence confirming the downward outlook.
  • The MACD is below the MACD Signal line, indicating a bearish momentum.

    Potential Entry Points and Take Profit Levels for GBPUSD

    Based on the Ichimoku Kinko Hyo analysis, potential entry points and profit levels could be identified as follows:

    Entry Point 1 (Short Term)

    A bearish continuation signal would be if the Tenkan-sen remains below the Kijun-sen. Traders may consider short positions upon this confirmation, targeting the recent swing low or support level as the take profit level.

    Entry Point 2 (Medium Term)

    A breakdown below the Kumo Cloud could serve as a medium-term entry point for short positions. Traders might initiate short positions upon this confirmation, targeting lower support levels or the next psychological level as the take profit level.

    Take Profit Levels

    • Short-term traders may consider taking profit near recent swing lows or support levels identified on the price chart.
      • 1.25751 – Recent swing low.
      • 1.25181 – Low price recorded on February 5th.
      • 1.24497 – 2.618 percent of the latest swing reversal.
    • Medium-term traders could target lower support levels or utilize trailing stop-loss orders to capture potential extended gains.
      • 1.24655 – The current value of weekly Kijun-ses may serve as support.
      • 1.22865 – The second support level generated by applying the standard Pivot Point methodology on the weekly chart.
      • 1.20326 – Weekly Senkou Span B acts as a potential support.

    Conclusion

    In conclusion, the Ichimoku Kinko Hyo analysis of GBPUSD suggests a bearish outlook in both the short and medium terms. Potential entry points for short positions include bearish continuation signals and breakdowns below the Kumo Cloud. Traders should carefully manage risk, consider utilizing appropriate stop-loss, and take profit levels to optimize their trading strategies. As always, it’s crucial to monitor market conditions and adjust trading plans accordingly to adapt to changing dynamics.

    author avatar image
    Andreas Thalassinos

    Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).