Like the most of the majors, the pound changed its direction after rapid growth in the beginning of September and is forming a downward trend.
In the end of September the pair made several attempts to break through the level of 1.3615 after which it dropped down. The reason for the fall was recent comments of the Fed’s head about further tightening of the monetary policy and optimistic prospects of the US economy growth in the medium term. In view of this the oversold USD received considerable investor support, and the pound on the contrary was subject to sales. During the recent week and a half the pair is trading within a narrow downward channel breaking through key support levels of 1.3450, 1.3400, 1.3380. USD gained additional support from strong labor market data and increased US economic growth.
Today special attention should be paid to the data on personal expenditure and consumer sentiment index in the USA.
Support and resistance
In the medium term the pair is likely to preserve the downward tendency. In the short term the pair has targets 1.3270, 1.3200. In fact, the pair remains in the long-term upward trend and has moved to the correction stage that may continue to the lower border of the channel at 1.3125. Technical indicators confirm the fall outlook: MACD indicates the growth in the volume of short positions, and Bollinger Bands in the H4 chart have reversed and are directed downwards.
Support levels: 1.3310, 1.3270, 1.3200, 1.3125, 1.3020, 1.3000, 1.2930.
Resistance levels: 1.3380, 1.3400, 1.3450, 1.3480, 1.3515, 1.3615, 1.3690.
In this situation short positions may be opened from the current level with targets at 1.3200, 1.3125. Stop-loss should be placed at the level of 1.3430.
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