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GBPUSD TECHNICAL ANALYSIS

  

U.K. Manufacturing Production & GDP

The manufacturing production is a measure of change in total inflation-adjusted output produced by manufacturers. The manufacturing sector accounts for approx—80% of total industrial production.

This is a month-on-month report; previous data reported on 9 July was -0.1%, below the forecast of 0.1%. This was, however, an improvement from May, which was -0.3%.

The Manufacturing data is released at the same time as the U.K. quarterly and year-on-year GDP.

The quarterly and annualized GDP has been down for 2021. This is due to the slower economic recovery post lockdown, despite the relaxation of Covid-19 restrictions.

The Bank of England is estimating the economy to expand by 7.25% in 2021. The manufacturing output decreased by 10% in 2020,  which is the worse plunge in more than 300 years.

Besides the pandemic’s impact, it’s been seven months since BREXIT. The effects are still lasting due to changes in import and export policies, affecting goods delivery into the E.U. and vice versa. 

A better-than-expected result for Manufacturing and GDP could be bullish for the GBP, and a lower-than-expected result could mean a bearish GBP.

The data is due Thursday 12 August at 08:00 GMT+2.

GBP/USD Technical Aalysis For The Daily Time Frame
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Average true range ( ATR)

When writing this technical analysis, the market’s volatility was neutral as no push in the market has yet occurred. The major news U.K. Manufacturing Production is something to keep looking for. As USD was strong due to the NFP report on Friday, there was high volatility in the market, pushing GBPUSD down.

Relative strength index (RSI)

The RSI indicator can still be seen in the middle of the overbought and oversold area. It is near the 40-45 zone. The market pattern in the daily time frame is bearish. The market movement and the direction also depend a lot on the USD, as on Friday, the market went bearish against all the USD pairs after the NFP reported positive results.

Technical Analysis using Price Action:

Using the top-down multi time frame for technical analysis, followed by 4hr and 30min for rejection and trade execution daily time frame.

Overall, the GBPUSD market seemed to be on a bullish side, meaning the prices were heading up. GBPUSD, as you can see on the daily chart, the price broke the previous high at 1.39074. This might be a possibility of the price making a pullback, making a swing low and then again making a swing high.

The significant price resistance will be 1.42143 if the market moves in an upward direction. At the same time, if the market moves downward, breaking the swing low, you can be waiting for a significant support zone at 1.35715.

The next major resistance zone was formed in June. There was a fall in GBPUSD due to a good strength in USD on Friday NFP. 

However, the leading technical analysis indicator that serves as the term in which a trading decision is made is based on the candlestick pattern noticed on the price chart, as we can see a bearish candle on the chart, meaning the market can still trade further down. It’s better to wait for the right moment and trade setup. A critical observation must be placed on the recent price pattern and the fundamental news effects on GBP this Thursday.

Potential pivot points using Price Action:

  • First  resistance point is 1.40010
  • Second resistance point is 1.40946
  • Third resistance point 1.42143
  • First support point is 1.37901
  • Second support point is 1.37304
  • Third support point is 1.35715

This marked resistance and support levels should be used as an entry or exit point trading motive when approaching the market in the future market openings.

GBP/USD Technical Analysis For The 4-Hour Time Frame
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After you have seen the daily chart of GBPUSD, coming into a 4hr T.F. will be an excellent top-down trading strategy. Here we can see the price was holding in the trend line moving up. This shows a bearish momentum and a good trade setup for day traders.

Looking forward, we can see the price breaking out the trendline and also forming lower high and lower lows. The market can further trade down till the 1.37304 support zone. After price reaching here, we can look for a candlestick or pattern formation for further accurate trade setup. If the market falls below the zone, the next zone to look at would be 1.35715.

If the price breaks the major high at 1.40010 and retests the zone making the resistance a support, you can look for a buy trade setup.


Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

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