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British Pound Challenges a Key Rising Trend Line

british pound

Looking at the British pound (GBP) on the above daily GBP/USD MT 4 price chart, the Cable Forex market is whipsawing above the 21 day simple moving average. The dollar (USD) is broadly stronger in the Forex market headed into the weekend.

The British pound is also challenging the rising trend line in play since 2 November, which is the monthly support level. A daily close below both the 21 day simple moving average and this rising trend line will extend the weakness of the sterling.

The GBP/USD Forex market was whipsawing yesterday and continues this unstable price movement into Friday’s early Asian trade session. The British pound‘s renewed weakness is stemming from news that that the European Union and its leaders are looking to publish no deal Brexit plans. This comes as trade negotiations are still at an apparent impasses as we approach the 31 December deadline.

There is also risk off sentiment in the Forex universe favoring the greenback as the United States has surpassed 250,000 coronavirus (Covid-19) deaths. The Trump administration, despite losing legal battle after legal battle over the vote continues to refuse to concede defeat. This is sending traders into the safe haven U.S. dollar.

Daily British Pound Technical Analysis (GBP/USD)

Looking at the above price action chart, the GBP/USD currency exchange rate is challenging that rising trend line, which is also supported by the 21 day simple moving average. With that said, a daily close below 1.3195 could be a trend changing event, as far as price action is concerned.

If that happens the Cable could then challenge last week’s low price point. This downside barrier lines u at 1.3105. The next layer of technical support then lines up at 1.31. Below this level, the monthly low price point at 1.2854 then comes into focus.

On the upside, a daily close above 1.3260 opens the door to challenge the technical resistance at 1.33. The monthly high price point at 1.3315 then comes into play.

A sustained close above 1.3315 opens the door to challenge the key technical resistance at 1.34. The September high price at 1.3485 then comes onto the radar.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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