Looking Closely to GBP/USD Medium and Short-Term Trades

Sterling traded sharply lower during the last two sessions against the greenback and plunged more than 1% after U.K. Prime Minster Theresa May signed the official letter to begin the hard Brexit negotiations. However, today, the GBP/USD pair is developing slightly higher after a strong rebound on the 100-daily SMA.

Going to the daily chart, we observed that the cable is moving within a consolidation area with upper boundary the 1.2700 strong psychological level and lower band the 1.1978 31-year low. After the Brexit referendum on June 24th, 2016, the pair fell to the lowest level since 1985, by falling 11% - the biggest intra-day fall recorded in modern history. Beyond that, the price lost its high volatility and awaits another important event for having a new aggressive run. If the GBP/USD traders boost the pair to surpass the upper boundary of its consolidation area, a bullish trend will be in progress with the next resistance level to watch 1.2900. On the other hand, a penetration of the lower band will expose the price to fresh multi-year lows. Technical indicators are moving with some weak momentum near its mid-levels. RSI fell and lies slightly above the neutral level whilst MACD is holding in the positive zone near the trigger line.

For the short-term traders, on the 4-hour chart, the pair met the 50-SMA. A jump above it will drive the pair further up at 1.2600 – 1.2615 critical zone. Otherwise, a fall beneath the 200-SMA which coincides with the 1.2380 support level will give the opportunity for more losses until 1.2330. Technical indicators are confirming the recent bullish attitude on price as both are moving higher. The RSI indicator is approaching the 50 level while the MACD oscillator printed a crossover to the upside with its trigger line.


JFD Research