05, June 2014

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General overview

British pound was in the side trading against the dollar and closed the day at opening prices. The latest news marked the construction industry slowdown which disappointed the market. According to the report the Purchasing Managers Index (PMI) for the construction sector fell to 60.0 in May from 60.8 in April which was worse than the forecast growth to 61.2. There is a chance that the Bank of England would discuss rates raising at its next meeting and it will provoke the pound growth.

The price is finding the first support at 1.6730, the next one is at 1.6670. The price is finding the first resistance at 1.6800, the next one is at 1.6860.

The price is below the Cloud and above the Chinkou Span. The Kijun-Sen is directed downward. The Cloud is descending. The downward movement will be continued as long the price is under the Kijun-Sen.

The MACD histogram is in negative area. The indicator is decreasing showing the sell signals.

Trading recommendations

We are waiting for the second 1.6765 level retest. If the retest fails, we will see a a downward price bounce, back to the support level 1.6700.