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GBP/USD: Key Resistance Turned Support Holds The Key

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Aayush Jindal

Key Highlights

  • GBP/USD corrected lower, but the 1.4000 zone acted as a strong support.
  • A major bullish trend line is forming with support near 1.4000 on the 4-hours chart.
  • EUR/USD could make another attempt to surpass the 1.2200 resistance zone.
  • The UK Claimant count could change 25.6K in April 2021, down from 10.1K.

GBP/USD Technical Analysis

This past week, the British Pound climbed higher nicely above the 1.4000 resistance against the US Dollar. GBP/USD surpassed 1.4100, but it failed to continue higher above 1.4165.

Looking at the 4-hours chart, the pair topped near the 1.4166 level. Recently, there was a downside correction below the 1.4100 level, but the pair remained well supported near the 1.4000 level.

It also remained well above the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours). A low was formed near 1.4005 and the pair is now trading above 1.4100.

There was a break above the 76.4% Fib retracement level of the downward move from the 1.4166 high to 1.4005 low. An immediate resistance is near the 1.4150 level.

The first major resistance on the upside is near the 1.4185 level. The main resistance sits near the 1.4200 level. A clear break above 1.4200 could open the doors for a fresh rally.

On the downside, an initial support is near the 1.4080 level. There is also a major bullish trend line forming with support near 1.4000 on the same chart. Any more losses might call for a test of the 100 SMA at 1.3950.

Looking at EUR/USD, the pair is holding steady above 1.2000 and it could soon attempt to clear the 1.2200 resistance zone.

Economic Releases

  • UK Claimant Count Change for April 2021 – Forecast 25.6K, versus 10.1K previous.
  • UK ILO Unemployment Rate for March 2021 (3M) – Forecast 4.9%, versus 4.9% previous.
  • Euro Zone Gross Domestic Product Q1 2021 (Preliminary) (QoQ) - Forecast -0.6%, versus -0.6% previous.
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