The British pound has experienced a lot of fireworks this month, but the currency remains in an uptrend against the U.S. dollar (GBP/USD). I stayed focused on this uptrend when I insisted on trading contrary to the screaming headlines about the UK getting the quarantine treatment from the rest of Europe.
The rebound unfolded a lot faster than I expected. GBP/USD hit my profit target well ahead of the close of trading in the U.S. The 15-minute chart shows the dramatic V-shaped recovery in GBPUSD. The labels mark significant intraday moments. Note that the British pound did not quite break quarantine as it topped out right at the point of the complete reversal.
The daily chart reveals the significance of the intraday emergence of buyers making a stand. GBP/USD perfectly touched the 50-day moving average (DMA) right at the intraday low. Buyers defended support and preserved the short-term uptrend. GBP/USD is even hovering above the 20DMA uptrend.
I placed horizontal lines in the daily chart where I think traders could signal a fresh breakout or a bearish breakdown. Above this channel, GBP/USD reaches a 2 1/2 year high. Below this channel, GBP/USD confirms a 50DMA breakdown with a breach of the December low. In between the lines I prefer buying the dips.
The 15-minute intraday chart looks very tempting for a fresh buy. The technicals are forming a kind of wedge with converging moving averages. However, I will stay a little more patient and see whether traders force a full reversal of the last buyings surge.
Be careful out there!
Full disclosure: no positions