GBPUSD – Correction continues but support coming

In yesterday’s cable update I highlighted 1.5350 and 1.54 as being the two key levels which should tell us whether we’re still in correction mode, or the correction is over. This morning, the pair broke below 1.5350 at the fourth time of asking, bringing 1.5315 – 1.5320 into play. The former is a support level from the middle of February and the latter is the 38.2% retracement of the move from 23 January lows to 26 February highs.

While this did provide some temporary relief, it wasn’t too long before this level was also broken, prompting a move back towards 1.53, which is already coming under considerable pressure. This is a previous level of resistance so may hold as support, especially as the 50-day SMA also falls around this level. That said, it isn’t currently looking good.

If we see a break below here, the next big support could come at 1.5250. Not only is this a round number which can quite often prove to be good support and resistance levels, it is only the 50% retracement of the above move. Just above this as well we have the 200-period SMA on the 4-hour chart which has historically proven to be a reliable support and resistance level, although not necessarily to the pip.

Below here the pair may find further support around 1.5220, 1.52 (both previous support and resistance) and 1.5180, the 61.8% retracement of the above move.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam