GBPUSD – Big Test for Major Support

Cable has looked quite bullish since bottoming out in April but it looks as though its failure to break through the 50 fib level – 15 July highs to 13 April lows – back in June was a warning that the bullish move is losing steam.

As you can see on the daily chart below, the 89-day simple moving average has been a very good trend indicator for the pair for some time now. Today’s sell-off has broken back below it and, barring a late rally, looks likely to close below.


If we see this, it would suggest the bull run is over and the bears are back in control. It would also create a very bearish candle on the daily chart and, barring a strong rally into the end of the week, a very bearish weekly candle.


Initial support may be found around 1.5450 where an ascending trend line – 5 May lows – intersects prior support and resistance levels.

Offering additional support at these levels is the 233-day simple moving average. While this hasn’t been a reliable support or resistance level during the recent consolidation phase, as they rarely are, it has been at times in the past so could be again.

The 21-week SMA on the other hand has been a reliable support and resistance level over the last couple of years and this could also offer significant support here.

A break below this level would be very bearish for the pair and could signal a move back towards this year’s lows in the coming months.


The next level of support could come around 1.5330 – 8 July lows – followed by 1.5170 – 1 June lows.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.