20, August 2014

GBP/USD (a 4-hour chart)

GBP/USD (a 4-hour chart)

General Overview

The British pound opened the week with a gap (price break). The driver for such a turn was the BoE head Sunday interview where he reduced the importance of wage growth as an indicator of influencing decisions regarding the rates recovery. The BoE chief said that real wages would rise gradually and they do not have to wait for the actual growth, to raise the rates. In most cases, the gap is always overlap and that was proved at yesterday’s trading when the pound suddenly fell, having broken the previous price range.

The price is finding the first support at 1.6570, the next one is at 1.6500. The price is finding the first resistance at 1.6640, the next one is at 1.6700.

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. The indicator is declining.

Trading recommendations

We expect the level of 1.6570 will be reached soon after that we expect a consolidation.