2016-08-22 14:59:09

Overview and dynamics
After the failed growth of GBP/USD pair at the beginning of the European session, the pair demonstrates a rebound from the resistance level 1.3140 (EMA144 on the 4-hour chart) and a decline.

Just above this level there is the upper limit of the downward channel and EMA200 on the 4-hour chart (near the level 1.3230).

In early August, GBP/USD pair rose to resistance level 1.3365 (Fibonacci level 23.6% of the correction to the drop of the pair after the Brexit referendum). However, after in early August the Bank of England lowered interest rates and expanded the program to stimulate the UK economy, GBP/USD pair is back to support level 1.2875 (the lower line of the channel on the daily chart). Near this level is also the support level 1.2900 (Fibonacci level 0%).

GBP/USD pair continues to remain within the range between the levels 1.3365, 1.2875, where GBP/USD pair has traded since the second week of July.

Our opinion
OsMA and Stochastic on the 4-hour and daily charts show mixed results and do not provide clear guidance. It is likely that the dynamics of GBP/USD pair SD this week almost completely depends on the two major events: publication on Friday at 11:30 (GMT + 3) of the UK GDP data for the 2nd quarter (pre-release) and the speech of the Fed's Janet Yellen on the same day (the time of her speech is not yet determined).

Both a continuation of corrective growth towards the resistance levels 1.3230 (EMA200 on the 4-hour chart), 1.3365 (Fibonacci level 23.6%, EMA50 on the daily chart and the upper limit of the range), and a decrease to the lower limit of the range near the levels 1.2875, 1.2900.

When opening positions on GBP/USD pair, switch to the smaller timeframes.

On the weekly and monthly charts indicators continue to recommend short, medium-term positions and GBP/USD pair is in a downward channel on the weekly chart with a lower limit below the level 1.2600.

In the case of the breakdown of the resistance level 1.3365 further growth of GBP/USD pair to the levels 1.3630 (lows in 2009, 2001, closing price of "Black Friday"), 1.3655 (38.2% Fibonacci level) is possible.

However, the medium-term fundamental background (the difference between the monetary policies of the Bank of England and the Fed, as well as expectations of near-zero growth in the UK economy in 2017) will put pressure on GBP/USD pair. The levels 1.2875, 1.3365 remain relevant in determining the future medium-term trading strategy for GBP/USD pair.

Support levels: 1.3060, 1.2900, 1.2875, 1.2800, 1.2700
Resistance levels: 1.3140, 1.3230, 1.3300, 1.3365, 1.3440, 1.3500, 1.3630, 1.3655

Trading recommendations

Sell according to the market. Stop-Loss 1.3150. Take-Profit 1.3060, 1.3000, 1.2900, 1.2875, 1.2800, 1.2700
Buy Stop 1.3150. Stop-Loss 1.3080. Take-Profit 1.3230, 1.3300, 1.3365, 1.3440, 1.3500, 1.3630, 1.3655

Rebound from the level 1.3140
Rebound from the level 1.3140

In the range 1.2875 – 1.3365
In the range 1.2875 – 1.3365