In the last seven days, the GBPUSD price reached a downtrend resistance line at 1.35000 as was discussed in the previous week analysis.
From there the GBP strength was high enough to break above and reach the horizontal resistance level at 1.35815. The price found some resistance at that level and had a hard time closing above.
We can see a candle with large wicks at that price level which indicates there is a mix of sellers and buyers at the same level.
The price could not close above 1.36200 which I have mentioned in the previous analysis. That level must be broken in order to switch from bearish sentiment into bullish sentiment on a short term basis.
The current price created wicks on the bottom and on the upper side and on the next day formed a strong bearish candle. That candle showed a short term bearish impulse which ended right on the downtrend channel resistance line. We can see a bullish Pin bar as a bullish strength on the market.
The price is currently in the confluence of resistance with a bullish Pin bar candle. We had a similar scenario on the 5th of February 2022, which ended with a higher price. At that moment, the price was not in the confluence of resistance.
From there we should wait until the price makes a move and closes above 1.36200 or below 1.34900 on a short term basis.
If the price manages to close above 1.36200 then the next resistance would be at 1.37000 which is an important level for buyers. That level has stopped the price from moving higher on the 11th of January 2022. This is the second attempt.
On the bottom side, the price would need to close below 1.34000 to continue bearish sentiment. The price could be inside the downtrend channel with the next support at 1.32000.
The market looks more bullish than bearish so I would give more chances for bulls to move the price higher. The reason is the bullish Pin bar on the retrace and the bullish market outlook last week.
Looking at the currency strength meter we can see that the GBP started to gain strength in the middle of January and the USD started to lose strength. On the 24th of January 2022, we can see the strength of the USD starts to decline sharply and GBP gains more strength.
On the chart, we can see that the 27th of January 2022 was the start of GBP strength and USD weakness. So, the currency strength confirmed the bullish move earlier and what we can see now the strength continues to rise on GBP.
Take the profit level 1.36800 which is higher than the previous candles when the bulls were pushing the price upwards.
<<<<<<< HEAD Frano is an engineer, author, forex trader and the owner of a blog where he teaches forex trading for beginners. Frano created GetKnowTrading website to share his knowledge, market analysis ======= Frano is an engineer, author, forex trader and the owner of a blog where he teaches forex courses for beginners. Frano created a website on how to trade forex to share his knowledge, market analysis >>>>>>> Userlogincount210522 which is also published on forexFactory.com, investing.com and many other trading related websites.