Before the opening of the European session, the GBP/USD pair is trading above 7/8 of Murray and below the SAM of 21, with a bearish bias in the short term.
The UK inflation figures were released yesterday. The official report showed that the Consumer Price Index for April rose 1.5% year-on-year, surpassing the expected 1.4% and following a 0.7% advance in the previous month. The underlying reading came in at 1.3%, as expected. The Producer Price Index in the same period registered 3.9%, also exceeding expectations.
The pound sterling runs the risk of prolonging its fall in the short term. Although its trajectory will depend on whether investors decide to buy or sell the US dollar. The key level to watch is the support of 1.4080.
The 4-hour chart shows that the pair is below the 21 SMA, trading on a bearish bias, although the 7/8 Murray could support the pair and bounce to resistance at 1.4160, 8/8 Murray and strong resistance.
The technical reading of the eagle indicator shows that the signal line is moving away from the overbought zone. There could be a new bullish momentum to then resume the decline, mainly on a break below 1.4080, there could be a new bearish wave.
Our recommendation is to buy if GBP/USD rebounds from the 1.4080 area with targets at 1.4160, or if the pair finds strong resistance at 1.4160 we could sell to 1.4080. These are the range levels for the next few hours.
Support and Resistance Levels for May 20 – 21, 2021
Resistance (3) 1.4237
Resistance (2) 1.4166
Resistance (1) 1.4135
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Support (1) 1.4084
Support (2) 1.4034
Support (3) 1.4000
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Trading tip for GBP/USD for May 20 - 21, 2021
Sell if pullback 1.4160 (8/8 of murray), with take profit at 1.4080, stop loss above 1.4195.
Buy if rebound around 1.4080 (weekly support), with take profit at 1.4160, stop loss below 1.4045.
The material has been provided by InstaForex Company - www.instaforex.com