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GBP/USD Corrects Lower, Key Support Nearby

Aayush Jindal

Aayush Jindal

Key Highlights

  • GBP/USD settled above the key 1.3700 resistance zone.
  • A major bullish trend line is forming with support near 1.3740 on the 4-hours chart.
  • EUR/USD failed to gain strength for a move above 1.1650.
  • Gold price climbed above the $1,800 resistance level.

 

GBP/USD Technical Analysis

The British Pound gained momentum after it broke the 1.3650 resistance against the US Dollar. GBP/USD cleared the 1.3750 resistance zone to move into a positive zone.

Looking at the 4-hours chart, the pair even traded above the 1.3800 level. A high was formed near 1.3830 and the pair settled above the 100 simple moving average (red, 4-hours).

Recently, there was a downside correction below the 1.3800 level. The pair corrected lower below the 23.6% Fib retracement level of the upward move from the 1.3566 swing low to 1.3831 high.

It is now consolidating above the 1.3750 support zone and the 200 simple moving average (green, 4-hours). There is also a major bullish trend line forming with support near 1.3740 on the same chart.

The next major support is near 1.3710. It is close to the 50% Fib retracement level of the upward move from the 1.3566 swing low to 1.3831 high. A close below the 1.3700 level might spark a larger decline. In the stated case, the pair could decline towards the 1.3650 level.

On the upside, an immediate resistance is near the 1.3800 level. The next major resistance is near the 1.3830 level, above which the pair might rise towards the 1.3920 level.

Looking at EUR/USD, the pair attempted an upside break above the 1.1650 resistance, but it failed and corrected lower.

Economic Releases

  • US Housing Price Index for August 2021 (MoM) - Forecast +1.3%, versus +1.4% previous.
  • US New Home Sales for Sep 2021 (MoM) – Forecast +1.5% versus +1.5% previous.