GBP/USD: correction near local lows

January 1, 2016

Current trend

Yesterday, the British Pound remained not far from its local low, reached the day before. On Tuesday, the pair fell to the level of 1.4785, 15 April low.

Trading activity is low ahead of New Year’s holidays, and a few macroeconomic data, released this week, has almost no significant influence.

However, the British currency managed to get support from UK’s Nationwide Housing Prices data. In December, the indicator rose by 0.8% compared to the previous month while a 0.5% growth had been expected. In annual terms, Housing Prices were up by 4.5% that exceeded the forecast as well.

Support and resistance

Bollinger Bands indicator on the daily chart is falling while the price range is narrowing down. MACD is trying to turn up but still keeping its sell signal. Stochastic is approaching the border of the oversold zone.

The indicators recommend waiting for clearer trading signals.

Support levels: 1.4800 (near current lows), 1.4765, 1.4730, 1.4700 (15 April low).

Resistance levels: 1.4835, 1.4864, 1.4894, 1.4934 (near 28 December high), 1.4956, 1.5000 (17 December level), 1.5026, 1.5053.

Trading tips

Long positions can be opened after the price turns up at 1.4800 and breaks out the level of 1.4850 (with appropriate indicators signals) with targets at 1.4900, 1.4950 and stop-loss at 1.4820. Validity – 2-3 days.

Short positions can be opened after the breakdown of the level of 1.4800 with the target at 1.4700 and stop-loss at 1.4840. Validity – 2-3 days.

Publication source
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