Current price movement in the downtrend within correction

May 7, 2015

Current trend

This week has been one of the most difficult for the Pound in the time period of the downtrend. Monthly chart shows that the price currently reached one of the most important level of   1.5200.

Given current price movement in the downtrend within correction, the levels of 1.5200-1.5230 is the zone of Fibonacci retracement of 23.6%, which is the first level of correction. A lot will depend on the results of today’s election in the UK, and the American labor market statistics, which will become known tomorrow.  

If the price goes up, next resistance level will be 1.5600, which coincides with 38.2% of Fibonacci retracement. If downtrend in the Pound resumes (which will be possible in case of breakdown of the levels of 1.5130 and 1.5030), the Pound will go to the local lows at the level of 1.4630.

Support and resistance

On the daily chart histogram OsMA is declining trying to reach zero level. As soon as it goes to the negative zone, it makes sense to open sell positions. Stochastic is in the sell zone; however the fact line has crossed the slow line from top to bottom, which gives a buy signal.

Resistance levels: 1.5250, 1.5370, 1.5440 and 1.5530.

Support levels: 1.5130, 1.5030 and 1.4940.

Trading tips

It makes sense to buy the pair in case of breakdown of the level of 1.5250 with take profit at 1.5440 and 1.5530. Sell positions can be opened after breakdown of the level of 1.1530 with the targets of 1.5060, 1.5030, 1.4940 and 1.4630.

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