GBPUSD trading at major support

Posted By Posted On 10 January 2016

GBPUSD, Monthly

GBPUSD has been falling for several months as markets have been adjusting to changing interest rates landscape that has lately been favouring the USD over the pound. Markets have also been worried about the approaching referendum that could lead to Britain exiting the Eurozone. Polls have been suggesting that opinion is more evenly divided than previously thought, though the UK government is still negotiating with EU partners for better terms.

After hitting a 50 month SMA in June 2015 the pair has now fallen to levels that attracted buyers in April 2015. These levels have been turn around areas also in 2010 and indeed in 2009 when market created an important bottom over a three to four month period. In monthly timeframe Stochastics (7) is oversold while RSI (7) indicates is right at the threshold of the oversold level. The nearest resistance level at 1.511 almost coincides with the 23.6% Fibonacci retracement level at 1.5188. The next monthly support is at 1.4230.



The pair rallied some 200 pips yesterday and created a daily bullish pin bar candle in the process. This supports the view that GBPUSD is trading near a major support level. The rally was stopped at an intraday resistance area between 1.4636 and 1.4661. These levels coincided with the down sloping regression line. Stochastics (7) is getting overbought and market has reacted lower forming a bearish pin bar in the four hour chart. The 30 period simple moving average is not far from the 1.4661 resistance while the upper Bollinger Bands are currently near 1.47 together with the 50 period moving average.

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