GBP/USD: the growth is an upward correction

Current trend

The British pound against the US currency reached the lower border of the downward channel 1.2570 and rebounded upwards. In the middle of the last week the demand on the British currency began to grow again, as the USD weakened due to the negative employment market data and key indices.

This week the trend develops, and after the slight downward correction the pair began went up again today. The main catalysts for the dynamics are trade moods, poor US macroeconomic releases, favorable Retail Sales data from the UK and the positive commentaries of Mark Carney, published today in the morning.

In the evening the US Richmond Fed Manufacturing Index and Fed’s Yellen Speech are worth traders’ attention today. In the end of the week the investors should focus on the US economy growth rate data.

Support and resistance

Despite the downward trend maintenance in the middle term trend, the upward trend can strengthen, and the pair can reach the level of 1.2890 in the nearest future (strong resistance level and the upper border of the downward channel).

The US 1 quarter economy growth rate data can give a negative signal for the US currency and make it fall. However it’s better to see the current upward trend as a correctional growth of the pair, and the downward trend can continue after the end of it. Increase short positions while the price is reaching the level of 1.2890.

On the daily chart the technical indicators confirm the forecast, MACD short positions volumes are high, Bollinger Bands are pointed downwards. Alternative scenario is the reverse of the pair into the narrower channel with the upper border at the level of 1.2770, coinciding with the middle line of Bollinger Bands.

Support levels: 1.2700, 1.2620, 1.2560, 1.2500, 1.2365, 1.2365, 1.2285, 1.2210, 1.2125.

Resistance levels: 1.2770, 1.2815, 1.2890, 1.2955, 1.3040, 1.3075, 1.3170.

Trading scenario

Increase the volume of short positions at the current level and open short pending orders from the levels of 1.2850, 1.2890 with the target at 1.2560, 1.2500, stop loss is at е 1.2940.