GBP/USD is trading in the red at the 1.4055 level and it could continue to drop if the US Dollar Index approaches and reaches new highs. The current sell-off was somehow expected after reaching a resistance zone.
The sentiment changed after the US inflation data was released. The CPI increased by 0.8% in April versus 0.2% expected and compared to the 0.6% growth in March, while the Core CPI registered a 0.9% rise versus 0.3% expected.
GBP/USD Temporary Sell-Off!
GBP/USD found strong resistance right above the R2 (1.4135) and below the 1.4177 static resistance. Its failure to stabilize above the R2 and beyond the 250% Fibonacci line signaled a temporary decline.
Stabilizing below the R1 (1.4060) could signal a further decline towards the first warning line (WL1) and down to the 1.3998 static support.
Forecast!
A potential rejection from 1.3998 and from WL1 could bring a new long opportunity. The current decline may end around these levels as the bias remains bullish in the medium to the long term.
A further upwards movement will be really confirmed after a valid breakout above the 250% Fibonacci line. The level of 1.4177 remains a major upside target, only a valid breakout above it could signal a major swing higher.
The material has been provided by InstaForex Company - www.instaforex.com