The GBP / USD is ahead in showing strength against the US dollar. In the European session, it reached a maximum of 1.3732 which is a level of strong resistance. As seen on the 4-hour chart, it has previously acted as a strong barrier. For example, on September 22 it tried to consolidate above this zone and failed to do so, which led it to fall to the annual low of 1.3410.
Therefore, we believe that if GBP / USD consolidates below 1.3730, there is a possibility of a correction in the next few hours until it finds support at the 200 EMA located at 1.3671, which also coincides with the key level of 4/8 of Murray.
Since September 29, the GBP / USD pair has been forming an uptrend channel and since then it has recovered by more than 300 pips. It is likely that it is reaching overbought levels, therefore we expect a correction in the next few hours.
At a fundamental level, the US CPI report published on October 13 showed a continuous increase in inflationary pressures. Investors, however, still appear unconvinced of a sustained period of inflation, which in turn affected US bond yields. It gave the GBP a strong push to break the 200 EMA.
Despite comments that the US central bank sticking to its plan to start reducing its bond purchases in 2021, it was unable to help the US dollar. Today we expect the dollar to take in these comments and stay above 4/8 Murray (93.75). Amid that, GBP / USD may drop to the support of the 200 EMA around 1.3671.
Our forecast is to sell at current price levels below the strong resistance at 1.3730, targeting 1.3671. If the pair consolidates below the 200 EMA, the last support will remain at the 21 SMA and the bottom line of the bullish channel.
The Eagle indicator is showing an overbought signal. It has touched the level of 95 on 3 occasions, which means an imminent downward correction in the next few hours. Therefore, a good point will be to sell below 1.3730.
Support and Resistance Levels for October 14 - 15, 2021
Resistance (3) 1.3797
Resistance (2) 1.3781
Resistance (1) 1.3727
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Support (1) 1.3631
Support (2) 1,3600
Support (3) 1.3543
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A trading tip for GBP/USD for October 14 - 15, 2021
Sell below 1.3730 (strong resistance) with take profit at 1.3671 (EMA 200 - 4/8), stop loss above 1.3765.
The material has been provided by InstaForex Company - www.instaforex.com