As soon as the 1.4000 mark's resistance was pierced, the rate started to plummet. Namely, a fundamental event caused a drop, which eventually even passed the support of the 1.3830/1.3870 zone. On Friday, the rate was looking for support in the 1.3800 mark.
In the meantime, it was spotted that a majority of GBP/USD traders of the Swiss Foreign Exchange had profited from the decline.
Economic Calendar
On Friday, at 13:30 GMT the US will publish its monthly employment data. The release will consist of the Average Hourly Earnings, Non-farm Employment Change and Unemployment Rate. The GBP/USD has moved from 18.5 to 29.3 pips on the publication since October.
Next week, on Wednesday, the US Consumer Price Index data could cause a minor move on USD assets at 13:30 GMT. The GBP/USD has moved from 8.6 to 25.8 pips on the announcement.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
GBP/USD short-term review
The GBP/USD started to test the resistance of the 200-hour SMA, as it finally pierced the resistance of the 1.4000 mark. However, at that time the head of the US Federal Reserve Jerome Powell started a speech. In his speech he revealed that the US monetary stimulus would remain unchanged. It resulted in a surge of the US Dollar against all assets.By the middle of Friday's trading hours, the currency exchange rate had passed the support zone of the 1.3850 level. The rate was expected to soon reach the support of the weekly S1 simple pivot point at 1.3804. In addition, the 1.3800 could provide psychological support.
In the case of the pivot point and the 1.3800 mark holding, the rate could trade sideways between the 1.3800 mark and the 1.3830 level. On the other hand, if the 1.3800 is passed, the rate could look for support in the February 12 low level of 1.3775.
Hourly Chart
On the daily candle chart, the rate is retracing back down, as it consolidates after reaching the 1.4200 mark.
In the meantime, note how the surge has occurred by being pushed up by the 55-day SMA. The rate overextended its surge when it reached the 1.4200 mark and moved too far away from the SMA. Due to that reason it became overbought.
In the near term future, the rate could look for support in the 55-day simple moving average, which recently reached above the 1.3720 level.
Daily chart
Read More: Technical Analysis
Traders stick to short positions
Since Wednesday, 62% of trader open position volume on the Swiss Foreign Exchange was in short positions. Traders were waiting for the retracement down.
On Friday, the sentiment was 61% short. Traders had not taken profits from their short positions, as they must have expected the decline to continue.
Meanwhile, in the 100-pip range around the rate the pending orders were 90% to buy the GBP/USD pair. These could be the take profits and stop losses of the short traders.
Previously, 72% of orders were to buy. Since the rate has moved more than 100 pips during the last 24 hours. It is assumed that those were the stop losses of the short positions.
Since Wednesday, 62% of trader open position volume on the Swiss Foreign Exchange was in short positions. Traders were waiting for the retracement down.
On Friday, the sentiment was 61% short. Traders had not taken profits from their short positions, as they must have expected the decline to continue.
Meanwhile, in the 100-pip range around the rate the pending orders were 90% to buy the GBP/USD pair. These could be the take profits and stop losses of the short traders.
Previously, 72% of orders were to buy. Since the rate has moved more than 100 pips during the last 24 hours. It is assumed that those were the stop losses of the short positions.