The US dollar index, #USDX, is bouncing above the SMA of 21 in 4-hour charts that is putting pressure on all currency pairs that trade against the dollar, which in turn keeps the pound under downward pressure.
If the USDX breaks the level of 93.35 (7/8), it could rise to 93.75. In turn, this could push GBP / USD down to the levels of 1.3549, a zone of -2/8 of murray that represents extremely oversold market conditions.
The event of the day will be the decision of the Federal Reserve. The central bank is expected to keep interest rates unchanged, analysts and investors will pay attention to what the Fed says about the bond purchase program.
FOMC members' forecasts and Jerome Powell's press conference will undoubtedly fuel high volatility in the currency market. The British pound could fall to the 1.3590 low or rise rapidly to the zone of resistance of SMA 21 at 1.3671. We must be very careful not to expose our trading accounts to high risk.
According to the 4-hour chart, it can be seen that the pound is approaching oversold levels. Since the eagle indicator is approaching the level of 10 and could reach up to 5, that would mean an imminent technical rebound. However, there is a possibility of a sharp break above 1.3660 above the symmetrical triangle technical pattern.
If the pound manages to rebound around 1.3590 or 1.3610 and consolidates above these levels, it will be a good opportunity to buy. On the contrary, if the pound breaks sharply the 1.3660 level and also consolidates above 1.3671 (0/8) and above the 21 SMA, a bullish move is likely to follow, targeting 1.3730. The pair could reach the 200 EMA located at 1.3793.
Our outlook remains bearish for the pound as long as it trades below 1.3670. We believe that it could extend its weakness. If it consolidates below 1.3590, the downward pressure could increase and it could drop to the level of 1.3550 where the extremely oversold zone of -2/8 of murray is located.
Support and Resistance Levels for September 22 - 23, 2021
Resistance (3) 1.3702
Resistance (2) 1.3681
Resistance (1) 1.3660
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Support (1) 1.3609
Support (2) 1.3578
Support (3) 1.3549
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Trading tip for GBP/USD for September 22 - 23, 2021
Buy if GBP rebounds above 1.3590 (-1/8) with take profit at 1.3670 and 1.3732 (1/8), stop loss below 1.3555.
Buy if GBP breaks above 1.3660 (0/8) with take profit at 1.3732 (1/8), stop loss below 1.3625.
