Bullish scenario in GBPUSD will be relevant in case of breakdown of 1.40655

Paying attention to the 4-hour chart, you will notice that:

  • on Wednesday trading, the breakdown of the support level of 1.4112 led to a noticeable strengthening of bearish sentiment, and our first target (1.40435) was practically reached tonight; in terms of fundamental analysis, the US dollar (USD) went up as US inflation data revived speculation about a rate hike,
  • at the level of 1.4049, a ‘fragile’ support for the British pound (GBP) formed after which consolidation began.

Now let’s look at the indicators:

  • The currency remains above the moving averages with periods of 34, 55, 89 and 144, which are directed upward and indicate continued bullish sentiment (in the medium term), as well as a number of support levels 1.40325, 1.3973, 1.3944 and 1.38995.
  • The MACD histogram is still in the positive area and below its signal line, continues to decline smoothly and thus gives a signal to sell the British pound (GBP).
  • Stochastic Oscillator is in the oversold zone and is giving an opposite signal as the% K line rises above the% D line.

Due to the conflicting signals provided by the indicators, as well as the ongoing consolidation, the most correct decision now is to focus on the nearest significant levels of support and resistance.

A ‘bullish’ scenario will be ‘activated’ in the event of a breakdown of the resistance level 1.40655, which may open the way to levels 1.4112, 1.41405 and 1.4164.

The ‘bearish’ scenario will begin to materialize in the event of a breakdown of the support level of 1.4049, after which the quotes may decline to levels 1.40025, 1.3953 and 1.3885.

We remind forex traders that today at 19:00 Moscow time. Bank of England Governor Andrew Bailey will deliver a speech at the civil open forum. Unexpected statements can have a significant impact on the further course of trading.

Resistance levels: 1.40655, 1.4079, 1.4112, 1.41405, 1.4164

Current price: 1.4058

Support levels: 1.4049, 1.40325, 1.40245, 1.40025, 1.3981, 1.3973, 1.3953

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