GBPUSD has been on a bearish trend since the start of the year 2022. The key level on GBPUSD for the month is 1.2350. Last time this level was tested was back in December, 2016. After 6 years, this level is being retested again and forming a monthly double bottom. At this level, H4 formed a bullish engulfing which indicates a minor support has formed. Retest the support back again, we will take a long position from this support level and continue the long position till the correction of next untested resistance. It is to be noted that market may range here before breaking out towards the upside.

The descending trendline is in formation and still above the current market prices. This trendline needs to breakout for buys and needs price action validation after the breakout. This validation will confirm the bullish trend further. Although, we do see a support trendline tapping the price action. This rejection maybe the reason for the market to continue going up. This will also follow with the bullish divergence.

The golden retracement area is a monthly major one but also confluences with the support level. This confluence can be embarked with the high potency bullish setup given we are already on a monthly support.

Both the EMA’s are bearish with a bearish death cross. After breaking out for sells, market has retested the EMA 50 and plunged. This retest means, the next push up has the tendency to continue breaking the EMA 50.

On oscillators, GBPUSD was heavily over sold with both rsi and cci diving as deep till the extents of 30 and -200. From this point, market had to correct itself and it rose back up for the neutrality of the oscillators. At this scenario, we do see a bullish divergence being formed on both the oscillators. This formation means that there is a strong bullish correction pending on GBPUSD.

GBPUSD is at a level, where it needs to have a bullish leg up to 200-300 pips.

GBPUSD at monthly support

May 05 2022

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