GBP/USD bounces off key support

After a sharp two week sell-off, the GBP/USD has reached and reacted from a key technical support area today.

After a sharp two week sell-off, the GBP/USD has reached and reacted from a key technical support area today.

As can be seen from the chart, the cable has reached its previous swing low and long-term bullish trend line around the 1.3710/15 area today. 

At this stage, one has to treat this as just a technical bounce rather than a trend reversal. However, if we start to see the breakdown of resistance levels then that could confirm a reversal in the trend.

The first key resistance is seen at 1.3900, a former support level. We expect the potential re-test of this level to offer at least a short-term bounce.

However, if the cable refuses to go down and eventually climbs above the most recent high at just below 1.4000 then that would be game over for the bears.

Meanwhile, if support at 1.3710/15 area gives way first then we could see a potential drop to the next key support area between 1.3550 and 1.3650. This range was formerly a major resistance zone.

Below that range, the next technically-important level is at around 1.3430 – the point of origin of last year’s breakout.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.