On Wednesday, the GBP/USD traded between various technical levels near 1.2320. In addition, it had broken the previously described channel down pattern.
In regards to the near term future, there could be either a surge up to 1.2400 or a drop to 1.2200.
Economic Calendar
As it occurred during the last week, due to the fundamental changes in the markets, Dukascopy Analytics suggest to note the scheduled macroeconomic events, but avoid using historical data for guidance.
Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.
However, click on the link and take a look at the last reactions to various events in March. Even already ignored events like Producers Price Index and Consumer Price Index caused notable reactions above 20 pips. Previously, the release of these data sets did not cause an increase of exchange rate volatility.
GBP/USD short-term review
Yesterday, the GBP/USD exchange rate broke the short-term descending channel. However, during Wednesday morning, the rate revealed new short-term descending channel.From a theoretical perspective, it is likely that some downside potential could prevail in the market. In this case the currency pair could target the Fibo 38.20% at 1.2190.
However, note that the exchange rate is supported by the 55-hour SMA near 1.2300. Thus, it is likely that the rate could break the upper channel line, and some upside potential could prevail. However, note that the rate would have to surpass the monthly PP at 1.2345.
Hourly Chart
On the daily candle chart, the pair bounced off the support of the 38.20% Fibonacci retracement level at 1.2217.
Meanwhile, take into account that the pair is still slightly oversold, as the daily simple moving averages are located above the 1.2580 level.
Daily chart
Read More: Technical Analysis
Traders remain long on GBP/USD
On Tuesday, on the Swiss Foreign Exchange 56% of all open position volume was in long positions.
By the middle of Wednesday's GMT trading hours, the sentiment was 57% long.
By the middle of Wednesday's GMT trading hours, the sentiment was 57% long.