GBPUSD dips below the weekly Pivot point, intraday analysis

GBPUSD dips below the weekly Pivot point, intraday analysis

By: James Ansher | Where To Trade | On:23-10-2014 03:51
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Key Highlights

  • Soft UK retail sales depressing the GBP
  • Divergent news from other major economies
  • Intraday Support and resistance levels
  • Technical analysis GBPUSD

Today London opened to surprisingly soft UK retail sales that are a stark contrast to the news from both the US and Europe. The UK retail sales year on year missed expectations by 0.2% to –0.3% (negative 0.3%) core retail sales Year on year also showed a 1.3% decline to 3.1% missing the expected figure of 3.4%.Following the release the London session has been experiencing a consistent sell off of the Cable against the other major currencies.

 

GBPUSD intraday analysis

Since London’s open, the GBPUSD has fallen over 60 pips, we found significant resistance at the 1.6000 major levels and the price has been rejected 30 pips up from the 1.5994 dip.

From the hourly chart, we can see that both the 14 period and 21 period moving averages are moving well above the prices. This is a sign that the bear have picked up momentum form this time frame. It is also evident that the moving averages are maintaining a bearish cross with the 21 period moving averages trading above the 14 period. This gives us further confirmation of the bearish momentum of the pair.

The stochastic from the hourly chart is fast approaching the oversold territory but it is currently giving a neutral indication at 25.61. Similarly the RSI is having a neutral reading at 35.07 but fast approaching the oversold territory. We anticipate the prices to keep sliding lower as soon as the current price rejection from the 1.600 major levels subsides. We should also see these two oscillators move away from the oversold territory as the correction persists in the short term.

 

Where To Trade - GBPUSD H1 22-10-2014

 

Intraday resistance and Support levels

Major Support levels

  • The first major support the pair has to go through is the 1.6000 major level
  • The next support is 1.5962 which is both the weekly and monthly S1
  • The third support is at 1.5874 which is 2013’s low and also this year’s low about 100 pips below. Due to the accumulation of speculative buyers, we are anticipating to have significant price rejection when we reach this level. We failed to break through this level last week.

Major Resistance levels

  • Our closest resistance level is the weekly pivot point at 1.6030
  • The next resistance is at 1.600 which is a major price level and also the potential intersection with the major daily down trend.
  • Our third major resistance level is at 1.6216 is the weekly R1.

 

Wrap up

 In order to get a better understanding of the overall market direction with the GBPUSD, a quick peek at the weekly and daily charts gives us a bearish outlook that is consistent with the outlook from the hourly. The moving averages are trading above the prices. This means we can maintain a bearish bias on the pair knowing that fundamentals and the outlook on the larger time frames back up our short term direction.

Under these conditions a great trading approach is first to maintain a bearish bias we already have for the pair. Secondly at 1.600 the price rejection may be severe and we may get whiplashed trading at this level. A better approach is to wait until we are well below this level in order to look for an entry. Also lets keep an eye for the spike in volatility as the market awaits GDP figures form the UK on Friday; It is best to hold on Friday trading until the figures are released and the GBPUSD has taken a direction.

James Ansher

James Ansher

When there is a will there is a trade

A successful Forex trader and expert advisor

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