14, August 2014

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General Overview

At very low news flow from the UK, the pound fell against the dollar in yesterday's trading. Obviously, the dollar was supported by technical factors presented by the strong levels of support and the employment and the inflation reports expectations.

If we get any hints of imminent cable tightening there may appear a firm support. Otherwise, the pressure on the pound is likely to be increased.

From a technical point of view we expect a rebound down from the upper bound of the channel, the market reaction to news of high volatility is ambiguous.

The price is finding the first support at 1.6700, the next one is at 1.6640. The price is finding the first resistance at 1.6770, the next one is at 1.6840.

There is a confirmed and strong sell signal. The price is under the Cloud and it is under the Chinkou Span. The Tenkan-sen and the Kijun-sen are directed downwards. The downward movement will be until the price is under the Cloud.

The MACD histogram is in a negative territory.

Trading recommendations

We expect the approach to the daily support level 1.6710 - 1.6700 in the longer term where the price might stay for a while forming a consolidation.