So, among all the major currencies (except the Japanese yen) that showed growth against the US dollar, the British pound took an honorable second place after the Australian dollar. At the same time, the GBP/USD currency pair strengthened by 0.80%, ending the session on July 5-9 at 1.3902, which is very symbolic. We will move on to a detailed analysis of the weekly and daily charts a little later. For now, let us talk about other information, and I will start with the topic of COVID-19. As you know, a new strain of coronavirus called Delta, which appeared in India in October 2020, has recently been showing itself quite actively. Moreover, after its appearance, the delta strain mutated three times, forming new subspecies at the same time. Many virologists believe that the current increase in the number of COVID-19 infections is due to new mutations of the delta strain. What does this mean for the markets and why is this information provided at all?
After the G20 meeting, US Treasury Secretary Janet Yellen warned during her speech that the new COVID-19 strain could cause significant damage to the global economic recovery. The same opinion on this issue was expressed by Mary Daly, a member of the Open Market Committee (FOMC) and concurrently president of the Federal Reserve Bank of San Francisco. The financier believes that it would be an unforgivable mistake to declare victory over the coronavirus and assume that the problem of COVID-19 no longer exists. To conclude this topic and emphasize its importance once again, and then proceed to the consideration of price charts, I note that the delta strain has already been detected in 107 countries according to the latest data.
Weekly
According to the results of last week's trading, a candle appeared on the chart. One of the characteristic features of this model is a fairly long lower shadow, which originated from a strong support zone in the area of 1.3730. As can be seen on the chart, this zone reflects the attacks of bears for the second week in a row, which only emphasizes its strength and significance. Another feature of this model is the absence of an upper shadow for the candle. However, a special force and the greatest chances of working out the reversal model of the candle analysis appear when this candle is formed at the end of a downward movement. Nevertheless, I believe that this is a signal for the possible growth of the pair.
It is also important to end the week above the strong and significant level of 1.3900 for market participants, as well as above the blue Kijun line of the Ichimoku indicator. However, for the time being, I remain with my previous opinion that while the GBP/USD pair is trading below the key technical and psychological zone of 1.4000-1.4015, the downside risks remain quite high. If the growth continues, the nearest target on the weekly timeframe looks like the red Tenkan line, which passes at 1.3989. The main current task of the players to lower the exchange rate remains the breakdown of the support level of 1.3730 and the closing of weekly trading under this mark.
Daily
As a result of the appearance of a huge bullish candle for July 9, a bullish picture emerges on the daily chart. However, to confirm it, it is necessary to pass up the black 89 exponential moving average, which is located at 1.3905. As you can see, at the time of writing this article, it is from here that the quote rebounds downwards. If the 89 EMA is successfully overcome, the next target on this timeframe will be the lower border of the Ichimoku daily cloud and the blue Kijun line, which are located near the strong technical level of 1.3960.
Trading recommendations for GBP/USD:
Taking into account the technical picture and the last candles on the two charts considered, I can most likely assume the growth of the pair and recommend buying GBP/USD after short-term declines to the price zone of 1.3865-1.3835 and the appearance of bullish candle patterns at smaller time intervals. If there are similar candle signals near 1.3930, 1.3960, and 1.4000, you can try selling the pair. The nearest targets for purchases are 1.3900-1.3910, and for sales: 1.3900-1.3860.
