Monday had been a bearish day for GBPUSD continuing the pressure from the Friday New York sessions.

Right now, GBPUSD is over-extended towards it sells. Although the major short sell was caused by fundamental news of the UK, these sells will be corrected sooner or later.

- Market structure: Currently, GBPUSD is at a support, which overlaps with the weekly time frame as well. The support price level is 1.3670. This is a crucial area for the market. Given the strong support, we will be looking to risk for our long positions.

- Trendline: Market is hovering within a descending channel. It tested the resistance trendline twice and coming to test the support trendline. Right now, it has tested the support trendline at the major support level. This gives us a second confirmation for long position.

- Retracement: At the major support where GBPUSD is right now, we see a confluence of the 75-78.6% golden retracement area. Having support and the trendline confluence with the retracement level, a push up is due.

- EMA's: EMA 50 was bearish whereas, EMA 200 was bullish. At the moment, GBPUSD is testing the EMA 200. This EMA 200 also coincides with the support + trendline restest + retracement levels. Having the test of the EMA gives an added confirmation for the pair to go long.

- RSI/CCI: Both oscillators are in the region of over-sold. RSI is at 30 and CCI at -170. RSI has formed a divergence. This divergence is formed at the major support levels, which add to the strength and upscale of the bull leg up.

GBPUSD has five confirmations at this given point. These 5 confirmations predict a probable bullish move. What we have to consider is, when usually such sell pressure instills in a pair, its mainly due to some unforeseen news event which is later on corrected. We are risking on the long position based on our technical factors and anticipating 50% of the move correction, which is roundly 150 pips. Stops should be below the current support.

GBPUSD over extended sells

Jul 19 2021