Overview:- The in depth analysis of daily chart is indicating that earlier pair was trading in downtrend channel and was heading south side, the pair is making successively lower lows and lower highs. A very balanced demand and supply is going on where bears were taking the charge and was falling down by leaps & bounds. The pair declined from 0.9300 level to 0.8785 level in just 5 weeks approx. which was a massive bearish momentum from short term point of view.
Fundamental Analysis :– The GBP has regained downside pressure as of late against the backdrop of deteriorating expectations around a Brexit deal and heightened effervescence in the UK political arena.Adding to GBP-weakness, BoE’s M.Saunders (usually on the hawkish side) hinted at the likeliness that the next move on rates by the BoE would be a cut. He also added that the floor for UK rates is close to zero, stressing that negative rates have negative effects on the banking system and threaten financial stability. Saunders also highlighted that high uncertainty is the most likely outcome for the UK, event on a soft-Brexit scenario.
Technical Analysis :- From technical prospective we can see that the primary trend is up and secondary trend is down and by applying the fibonacci retracement line in the primary trend from the peaks & troughts 0.8483 level to 0.9323 level we may notice that pair has retraced exactly 61.8% fibonacci retracement level which indicates that there is no more selling pressure and we may see a panic buying from these level and the buying has already started in the recent week as we witnessed the same. The pair has given weekly closing very positive i.e. bullish marabuzo candlestick this week although previous weekly candle was doji candlestick from where trend has started to change.A bullish marabuzo candlestick on daily as well as weekly chart has been posted which indicates that bulls have been entered in the game.
A short term downtrend channel was formed on the daily chart which has been breached out recently with the formation of bullish marabuzo candlestick. The MACD indicator is showing the bullish signal which is a recent development on the daily chart whereas RSI recently just kissed the oversold territory’s bench mark i.e. 30 level and turned up 45 level and it seems like in the coming week we may see a sustainable move above 50 level.
One more thing we can notice that pair has taken support from very crucial support level i.e. 200 SMA lines which is suggesting us some bounce back however we will get further confirmation above 0.8964 level.
The way bulls have snatched the bite from bear’s mouth and bulls are dominating the bears it seems like bulls are approaching the 0.9300 level in short term. Odds are in favor of bulls and we will keep our bias bullish on the pair as long as 0.8780 level remains intact on closing basis. The 0.9085 level is immediate resistance level followed by 0.9250 level whereas the 0.8800 level is key support level followed by 0.8750 level.
Trade idea:- Based on chart and studies above we can suggest to our traders and investors that go for long at 0.8860-50 level for the target of 0.9000 and 0.9085 level with the tight stop loss of 0.8780 level.