The GBP / USD pair, in the American session, is trading below a downward pressure line. In the middle of the European session, the British pound reached an intraday high at 1.3898, then the top of the bearish channel prevented its advance. Now we are watching a correction.
The key level is the area of the 21 SMA, around 1.3852. While the pair remains above this level, it is expected to make a bullish movement towards the 4/8 zone of murray located at 1.3916 and towards the 200 EMA in 1.3964 (3/8).
On the contrary, if in the next few hours the GBP / USD pair breaks the SMA of 21 and consolidates below this level, we should expect a break in the bullish channel line and a consolidation below 1.3840 for a probable fall to the area of 1.3793 and 1.3740.
The US economy is still a long way from that performance that justifies a gradual reduction in the bank's bond buying program. Powell said the price increase is related to the reopening and therefore is a temporary phenomenon, although he acknowledged that it could persist for a few months.
This data would put the strength of the US dollar at risk, as it is at overbought levels, after its index reached the maximum of 92.79. However, the United Kingdom also has other problems such as the increase in COVID-19 cases due to the variant Delta, inflation and the soonest reopening of the economy scheduled for this Monday, July 19.
Market sentiment shows that 60.12% of traders are buying the GBP / USD pair. This is a negative sign, as the British pound could fall to the low of 1.3740, and to the strong support of 1.3670.
Our recommendation is to buy above 1.3852. If the price breaks the bullish channel, we should sell only if it trades below 1.3840 with targets at 1.3740. The eagle indicator is in the overbought zone and is showing a probable downward correction in the coming days.
Support and Resistance Levels for July 15 - 16, 2021
Resistance (3) 1.3988
Resistance (2) 1.3939
Resistance (1) 1.3897
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Support (1) 1.3807
Support (2) 1.3758
Support (3) 1.3716
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Trading tip for GBP/USD for July 15 - 16, 2021
Buy above SMA 21 at 1.3855, with take profit at 1.3916 (4/8) and 1.3964 (EMA 200), stop loss below 1.
Sell below SMA 21 or if breaks 1.3840, with take profit at 1.3800 and 13740, stop loss above 1.3875.
The material has been provided by InstaForex Company - www.instaforex.com