In the early American session, the GBP / USD pair is trading below the SMA of 21 and making a correction to the 61.8% Fibonacci retracement. In a 1-hour chart, the pair is in the overbought zone. A correction is likely to continue its upward cycle.
Yesterday, we saw a solid technical rebound from the low of 1.3790, but on the 4-hour charts it found resistance around the 21 SMA area, which could be making a correction at this time. We expect it to consolidate above 61.8% Fibonacci. If the price bounces off this level, it could continue its bullish cycle.
The UK government's decision to delay the final phase of lockdown measures amid a surge in COVID-19 cases from the so-called Delta variant clouds prospects for a rapid UK economic recovery from the pandemic. For this reason, the British Pound could be under downward pressure to trade below the psychological level of 1.40 in the medium term.
Importantly, the Fed surprised investors after the June monetary policy meeting and advanced its calendar for the two interest rate hikes by 2023.
From a technical viewpoint, the GBP / USD pair could be forming a pattern called a pennant. If the British pound trades above 1.3900, it could be a sign of a further bullish movement. To reach the resistance zone of 1.4007, there is the EMA of 200.
Conversely, if the GBP / USD pair trades below the 21 SMA around 1.3890, the outlook may be negative and the price may fall to the 1.3840 (61.8%) and 1.3790 2/8 murray zone.
Our recommendation for today is to buy above 1.39, or wait for a bounce at the 61.8% Fibonacci zone around 1.3840 with targets at the 1.40 psychological level.
You can sell the GBP / USD pair only if it consolidates below the 21 SMA with targets at 1.3840 and 1.3793. The eagle indicator is showing overbought signal.
Support and Resistance Levels for June 22 – 23, 2021
Resistance (3) 1.4027
Resistance (2) 1.3983
Resistance (1) 1.3928
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Support (1) 1.3833
Support (2) 1.3734
Support (3) 1.3684
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Trading tip for GBP/USD for June 22 - 23, 2021
Buy above 1.3898, (SMA 21), with take profit at 1.4007 (EMA 200), stop loss below 1.3865.
Sell below 1.3890 (SMA 21), with take profit at 1.3840 (3/8) and 1.3793, stop loss above 1.3930.
