17, October 2016

GBP/USD (a 4-hour chart)

General overview

The pound strengthened on the back of the better-than-expected Housing Price Balance in the UK.

Current situation

The pound failed to break the 1.2100 level, the price reversed and strengthened to 1.2300. However, the recovery was short-lived and the price eased to 1.2200 where the GBP/USD spent the whole day. According to the 1 hour chart the 100-EMA did not let the price to go higher, the moving average rejected the pound downwards. The price is around the 50-EMA which provides a solid resistance for the sterling. The 50, 100 and 200 EMAs maintained their bearish slope. The current resistance is seen at 1.2300, the support lies at 1.2200. 

The MACD histogram decreased which indicates the sellers’ strength. RSI indicator is holding near oversold levels.

Trading recommendations

The overall structure remains bearish. However, we do not exclude another leg up towards the 1.2400 resistance region. The nearest sellers' target remains the support level 1.2100.