Review and dynamics
Following yesterday’s decision by the Bank of England to leave interest rate unchanged at the level of 0.5%, the pair GBP/USD sharply went up reaching the level of 1.3475. However, at the closing of yesterday’s trading day the price was at the level of 1.3340. In our yesterday review it was supposed that “if the Bank of England will not raise the rate the pair can go up to 1.3430 and the rise can continue. However fundamental background is in favor of the decline in the pair.”
Since the opening of today’s trading session the pair GBP/USD continued to rise; however, at the opening of the European session the pair started to decline, reaching the level of 1.3340.
On the hourly chart the indicators OsMA and Stochastic give signals to sell. If the decline resumes today, the pair can fall below the level of 1.3230, which is close to ЕМА200 on the hourly chart and ЕМА50 on 4-hour chart; after that the decline will continue.
An alternative scenario suggests that the pair can go up until the next meeting of the Bank of England on the 4th of August. The pair can break out the level of 1.3480 and the pair consolidates above this level until the end of this month, a pin-bar may be formed on the monthly chart, which will indicate possibility of the further rise up to 1.3650 (lows of 2009 and 2001), 1.3670 (closing price of the “black Friday”), 1.3860 (lows of February and the last wave of decline since mid December 2015 and the level of 1.5230, from which the pair started to rise to the highs of June at the level of 1.5000 (Fibonacci 0%).
Further rise is likely as fundamental factors support the decline in the pair
Support levels: 1.3300, 1.3230, 1.3120, 1.3020, 1.2900 and 1.2800.
Resistance levels: 1.3430, 1.3480, 1.3500, 1.3600, 1.3670, 1.3700, 1.3800 and 1.3860.
Sell on the market. Stop-Loss: 1.3430. Take-Profit: 1.3300, 1.3230, 1.3120, 1.3020, 1.2900 and 1.2800.
Buy Stop: 1.3440. Stop-Loss: 1.3390. Take-Profit: 1.3480, 1.3500, 1.3600, 1.3670, 1.3700, 1.3800 and 1.3860.
In the descending channel
Resistance levels: 1.3430 and 1.3480