2016-09-28 15:15:47

Review and dynamics
Yesterday's positive US macro-economic statistics provided support to the USD. Today the pair GBP/USD is traded with the decline compared with the yesterday's closing level.

However, the pair GBP/USD is still in the range of 1.3365 and 1.2875.

The level of 1.3365 is Fibonacci 23.6%, which the pair reached after the decline of the pair straight after the Brexit referendum; the level of 1.2875 is the lows of 2016.

The pair GBP/USD has been trading in this range since early July.

Currently, the pair GBP/USD has reached the lower area of the range after decision by the Bank of England to lower interest rate and expand the program to stimulate economy.

Our opinion
On the 4 hour, daily and weekly charts the indicators OsMA and Stochastic give signals for short positions.

In view of the facts that the British economy has not yet completely regained and the US Fed plans monetary policy tightening (even if it takes place not too soon), cause the rise in the USD and, consequently, the decline in the pair GBP/USD.

On the weekly chart the pair GBP/USD is in a descending channel with the lower limit below the level of 1.2600.

Breakdown of the support level of 1.2875 will trigger further decline in GBP/USD in the descending channel.

In case of the alternative scenario the pair will break out the level of 1.3365 and continue to rise up to 1.3630 (the lows of 2009 and 2001, and the closing price of the "black Friday") and 1.3655 (Fibonacci 38.2%). However, this scenario is possible only after break out of the resistance level of 1.3140 (ЕМА200 on 4-hour chart), which is unlikely due to the difference between monetary policies of the Bank of England and the US Fed, and expectations of almost zero growth of the UK economy in 2017.

The pair is likely to move in the range of 1.2875 and 1.3365 in the medium-term.

Support levels: 1.2900, 1.2875, 1.2800 and 1.2700.
Resistance levels: 1.3140, 1.3365, 1.3445, 1.3480, 1.3500, 1.3630 and 1.3655.

Trading tips
Sell on the market. Stop-Loss: 1.3035. Take-Profit: 1.2900, 1.2875, 1.2800 and 1.2700.
Buy Stop: 1.3040. Stop-Loss: 1.2990. Take-Profit: 11.3140, 1.3365 and 1.3445.

At the bottom of the range
At the bottom of the range

In the descending channel
In the descending channel