The GBPUSD pair has found some decent support after it hit the critical support level at 1.21120 (low of 14th March 2017). From that level, cable has started its extended bullish rally but eventually found some cluster of resistance at 1.36529. Most of the professional investors shorted the cable at that level with the bearish pin bar formed at that critical resistance. Currently, the pair is testing the medium term bullish trend line support level at 1.30998 in the daily chart.
Though we had an initial breach of the medium term bullish trend line, the buyers eventually found some fresh buying pressure near the 38.2% Fibonacci retracement level at 1.30655 (drawn from the low of 14th March 2017 to the high of 20th September 2017). A daily closing of the price above the 38.2% retracement level with a bullish price action confirmation signal will confirm the completion of recent bearish correction of this pair.
GBPUSD testing the medium term bullish trend line support
From the above figure, you can clearly see that the bears have capped the bullish rally of the cable near the critical resistance level at 1.36529.Currently (4 PM GMT +6) the pair is testing the 38.2 Fibonacci retracement level. If this support level holds then we might see another strong bullish rally in the GBPUSD pair in the upcoming days. Most of the leading investors are cautiously waiting on the sideline for Mark Carney speech (Governor of BoE) to get a clear clue regarding the recent performance of British economy. On the other hand, we have Retail Sales m/m data release for the British economy on Thursday. Strong positive data will help the cable bulls to push the price higher in the CFD trading industry.
If the bulls fail to attain bullish momentum from this current level then the ultimate bearish target for this pair would be 50% Fibonacci retracement level in the daily chart. This level is going to provide a significant amount of support to this pair as the 200 day SMA also coincides with 50% retracement level. From that level, we might see some decent bullish bounce in the GBPUSD pair but the upward movement is most likely to be capped by the critical resistance level at 1.30693.If the bears manage to take out the critical support level at 1.26955 (61.8% Fibonacci retracement level) then this will be the confirmation of the initial top formation for the GBPUSD pair near the critical resistance level at 1.36529. A daily closing of the price below the 61.8% retracement level will bring substantial bearish rally which will ultimately target the low of 14th March 2017.
GBPUSD weekly chart analysis
GBPUSD pair rejecting the 100 weekly SMA
In the weekly chart, you can clearly see that the bears are taking control of this market for the last three weeks. The pair tried to breach the 100 weekly SMA for three consecutive times but eventually failed. Currently, the price is trapped between the 100 weekly SMA and 38.2% Fibonacci retracement level in the weekly chart. Most of the leading investors are currently waiting on the sideline for a clear clue to trade this pair. If the FED chairperson Janet Yellen comes up with a hawkish speech regarding their third rate hike decision then we are most likely to see a bearish breakout in this pair. On the contrary, a delay in the rate hike decision will help the cable bulls to clear out the 100 weekly SMA.A daily closing of the price above the crucial resistance level at 1.32699 will ultimately challenge the critical resistance level at 1.36529. On the contrary, a clear break of the 38.2 Fibonacci retracement level will result in ranging movement of this pair since we have plenty of support down below this level. So it’s better to stay on the sideline until we get a clear clue regarding the market next movement.