GBP/USD price analysis: support seen at 1.2650-1.2643
GBP/USD price analysis: with support seen at 1.2650-1.2643, we look for losses to be limited. We look to buy the dips for a countertrend corrective move
Market highlights from the past week
Thursday, September 17: the Bank of England held interest rates at 0.1 per cent following the latest monetary policy meeting, with the ceiling of bond purchases under the QE programme also maintained at £745bn ($948bn, €813bn).
Friday, September 18: a more defensive risk tone provided an element of defensive US dollar support, although underlying US sentiment remained weak.
Monday, September 21: risk conditions dominated during the day with the dollar gaining strong support as equity markets declined sharply.
Tuesday, September 22: sterling was subjected to volatile trading and failed to hold gains triggered by BoE Governor Andrew Bailey’s downplaying of negative rates with very weak sentiment.
Wednesday, September 23: sterling was able to demonstrate some resilience amid expectations of fiscal support measures.
GBP/USD price analysis
Let’s have a look at the technical viewpoint:
Monthly: traded to a multiyear low of 1.1410 in March. We have seen strong selling in September: this candle is likely to close as a bearish engulfing pattern offering a negative medium-term outlook. Trendline support is seen at 1.1890.
Weekly: the 161.8 per cent extension from 1.1410-1.2647 is located at 1.3412. The previous swing high from the week of December 16, 2019 is located at 1.3422.
Daily: April and May high trades were 1.2647 and 1.2643. What was resistance, now becomes support.
Intraday four-hour: trading at oversold extremes. The 261.8 per cent extension level is located at 1.2650 (from 1.3483-1.3287).
Outlook: with support seen at 1.2650-1.2643, we look for losses to be limited. Look to buy the dips for a countertrend corrective move.
Possible trade set-up:
Action: Buying at 1.2650 (261.8 per cent)
Target: 1.3165 (previous swing low)
Potential return on risk to first target: R10 (reward 515 / risk 50)
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