GBPUSD, Daily

The GBP has seen losses over the last 7 trading sessions in the aftermath of the markets’ knee-jerk reaction to the U.S. Fed rate hike last week. The pound continues to trade with a weakening bias against both the dollar and the euro.

The GBPUSD reached my initial target at 1.4890 and also my second target at 1.4813 to reach a low near the 1.4800 area, during yesterday’s session (See my December 14 and December 21 post).

At the time of writing, the GBPUSD is bouncing off the 1.48 level and trading up around 70 pips in a “technical bounce”, even though the U.K. Q3 GDP has been unexpectedly revised lower, which is seen as negative for the GBP.

I still believe that traders should be on alert and seek periods of GBPUSD strength, as an opportunity to resell the pair near the upper end of the longer term downward slopping trend channel, ideally between the 1.50 – 1.51 areas for a 1.4730 (March 2015 Low) target price support area spotted on the weekly chart.

Janne Muta

Chief Market Analyst

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GBPUSD, Daily

The GBPUSD pair continued to grind lower at the start of the week after remarks from BoE MPC Martin Weale, highlighting that “the factors pushing down inflation have become a bit more prolonged”. Price has since recovered from the early sell-off and is currently trading higher for the day. The fundamental outlook, in my view, supports that the GBP will continue to weaken vs the USD for some time to come and that traders should be ready to resell the pair on bounces.

Technically, the GBPUSD remains within a bearish channel over the mid term. I would be on alert for entering new short sales during periods of strength with any price bounce off the current levels (1.4920) to stop near the 1.5110 area, provided that price fails to break below the 1.4860 zone. Otherwise, my short term GBPUSD view supports sell positions near the 1.4955-1.50 area for a 1.4813 target.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, Daily

The GBP is under pressure ahead of this week’s U.S. FOMC interest rate decision that could provide continued uplift for the USD against the GBP. I would expect some GBPUSD choppy trading as we move closer to Wednesday since also on tap we have some key U.K. data that, if disappoints, could support a Bank of England interest rate hike delay, which in turn could provide some further support for GBPUSD short sellers. I would expect the GBPUSD to remain biased to the downside against the USD in the current macro environment with my technical medium term price targets for the GBPUSD at 1.4955 (S1) with a possible test of the April 20th lows near 1.4890 (S2).

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, Daily

The GBP has under-performed this week after BoE governor Carney said that the low interest rate environment is likely to remain for some time, while his colleague Haldane said that inflation risks were “skewed materially to the downside.” This Dovish BoE speak is seen as a driver for the GBP weakness, as it suggest that the BoE will wait till after the U.S. Fed and ECB rate moves to take effect before making any move. Technically, the GBP has further downside potential towards the 1.4960′s with room for a deeper mover lower near the 1.4890’s-60.

The downside move could be interrupted provided the key 1.5025 support holds, meaning it could support a potential price bounce for a lower top below 1.5335. The current strategy calls for selling into any signs of strength for an initial 1.4960 target, with stops near 1.5335.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, Weekly

After breaking out of the descending regression channel GBPUSD made a brief move outside the upper Bollinger bands before falling back to current levels. The pair has found some support from the 50% Fibonacci level and has moved sideways since Monday. This is however a mid-range level that could get broken due to the fact that this market is not extended to the downside. Weekly pivot low resistance is at 1.5390 (relatively close to current price). Current levels are therefore more risky and I would be interested in long trades at lower levels, between 1.4962 and 1.5054. With support and resistances so close to each other it’s likely though that this market will be range bound for the rest of the week.

GBPUSD, Daily

The March 18^th high created a support level that was strong enough to turn GBPUSD higher in the beginning of May. Now this same pivotal candle support coincides with lower daily Bollinger Bands and the 50 day SMA. At the same time Stochastics oscillator is pointing higher after it was oversold. After last two weeks’ downside movement the pair closed yesterday above previous day’s high. When this takes place at support level it is a Bullish signal and should be taken as an alert to look for smaller time frame charts in order to identify the right levels for buy signal monitoring. However, this has to be taken as a very short term indication as the resistance level at 1.5447 is not very far. This is likely to test the commitment among the buyers should the short term indications prove to be correct. The 50% Fibonacci level is slightly above the aforementioned resistance at 1.5498 while the nearest daily support levels are at 1.5164 and 1.5089.

GBPUSD, 240 min

After hitting the upper Bollinger bands and 50 period SMA, price has fallen back to the level it broke out from the 4h descending regression channel. This level is highlighted by the 50% and 61.8% Fibonacci retracements and at the time of writing price is trading just above the 61.8% Fib level. Hourly chart created a pin bar pointing to a potential reversal and there was an attempt to take the market higher. However over the last two hourly bars the upside momentum has been non-existent and price has corrected lower. The resistance level at 1.5326  (coinciding with 23.6% Fib level) is relatively close and could well be the reason for sluggish performance. Apart from Fibonacci levels the nearest support level is at 1.5210 and coincides with 4h lower Bollinger Bands.

 

Conclusion

In the weekly context GBPUSD is still relatively close to the upper Bollinger Bands. Also, price trading at 50% Fibonacci retracement points to the fact that this level is mid-range and therefore not the ideal area for a weekly turn around to take place. Also the weekly pivot bar low at 1.5394 is relatively close to the current price and suggests further weakness could be ahead over the coming weeks. However, before that is likely to happen we might see a rally to the 1.5447 resistance as daily time frame has some supporting elements for the pair (lower Bollinger bands, 50 day SMA and historical support at 1.5164 ) and there was a daily buy signal yesterday (a close above previous day high). Support and resistance being relatively close to each other could lead to a range bound market. As per usual, look for lower time frame price action to confirm any trading ideas at support and resistance levels.

Janne Muta

Chief Market Analyst

HotForex

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.