In the European pre-market, the GBP / USD pair is trading below the 21 SMA and just in the area of the 8/8 murray line, showing a bearish bias, but trading within an ascending wedge. With a breakout and consolidation below this pattern around 1.4150, we expect a correction to the zone of 1.4021, the level of 200 EMA.
The British pound reached highs last seen since April 2018 at 1.4228. From this point, it has fallen to the 8/8 murray zone around 1.4155. The drop was triggered by a downward revision of the UK Markit Manufacturing PMI, which came in at 65.6 in May from 66.1. However, the decline continued despite limited buying interest for the dollar.
An upward movement in the yields of the Treasury bonds of the United States has helped the dollar to recover some of its losses. If the USDX continues with this technical rebound, it could push down the GBP / USD pair until the price reaches the psychological level of 1.40.
The pair has made more than 5 attempts to consolidate above the 1.4221 zone in 4-hour charts. However, the pair has failed the last attempt this week, but quickly fell below this level. It gives us a sign that this area is the key point to watch and a zone of strong resistance.
On the 4-hour chart, GBP / USD is consolidating below the 21 SMA. As long as it remains below 1.4195, the downward pressure is likely to intensify to find support at the 1.4021 and 1.4000 area.
As long as the British pound is trading below this level, we expect the pair to continue with the technical correction and a break below the 1.40 psychological level. There may be a change in the medium-term trend with targets up to 1.3670.
Our recommendation is to sell below 1.4221 and below 1.4160, with targets at 1.4021. The eagle indicator is showing bearish signal.
Support and Resistance Levels for June 01 – 02, 2021
Resistance (3) 1.4240
Resistance (2) 1.4213
Resistance (1) 1.4179
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Support (1) 1.4111
Support (2) 1.4076
Support (3) 1.4037
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Trading tip for GBP/USD for June 01 - 02, 2021
Sell below 1.4210 (SMA 21), with take profit at 1.4160 (8/8), and 1.4021, stop loss above 1.4250.
Sell if breaks 1.4160 (8/8 of murray) with take profit at 1.4099 and 1.4021 (EMA 200), stop loss above 1.4195.
The material has been provided by InstaForex Company - www.instaforex.com