Since the end of June British currency has been growing against USD due to falling of the investors’ interest. The pair was trading within the steep upward channel; it reached the key resistance level, reversed and began to fall. The main catalyst was the Bank of England decision to keep the interest rate and the economy stimulation program. In addition, the investors reacted to the head of the Bank of England Mark Carney’s commentaries upon the uncertainty due to Brexit, which worsened the investment climate in the UK. As a result, the demand on the GBP has decreased rapidly, and the pair fell.
On Friday the pair fell down again due to favorable employment data from the USA: as expected, the Unemployment Rate fell by 0.1%, and Non-Farm Payrolls indicator was better than the previous value. USD was supported, and the pair continued to go down.
This week traders should pay attention to employment market and building sector of the USA.
Support and resistance
The decrease of the long positions volumes and the growth of the US currency are expected. The demand on the USD will return, so it’s relevant to increase the volumes of short positions, counting on the reversal or long correction of the pair.
In the short term the fall with the target at 1.2930 is expected. In the middle term period the pair is unlikely to break strong support levels at 1.2805, 1.2700. The instrument will probably form a long downward correction, and the new upward wave will develop afterwards.
Technical indicators are changing their readings, MACD’s long positions volumes are decreasing, the pair reached the middle line of Bollinger Bands and consolidated here.
Support levels: 1.2930, 1.2805, 1.2700, 1.2590, 1.2360, 1.2550.
Resistance levels: 1.3125, 1.3200, 1.3270, 1.3310, 1.3370.
It’s better to increase the volume of short positions with the targets at 1.2930, 1.2805, stop loss is 1.3130.