Key levels lie below
The pound has been recovering against the dollar this month after breaking key support towards the end of September, but it may be running into trouble.
The pair has run into some resistance around an area that has been a major support zone for much of the year so far. What’s more, it falls around the 50% retracement level which would be a typical rotation level during a correction.
This level has been strongly rejected on a few occasions now, the strongest of which coming today, with price now testing recent lows after pulling significantly back.
The recent rally had already been running on low momentum and further resistance lay a little above around the 61.8% retracement level, which coincided with the 200/233-day SMA band on the 4-hour chart.
A move below 1.3580 may suggest the correction is over, with a break of 1.3544 arguably confirming that. This would trigger the break of the neckline of a double top and may suggest the pair is eyeing the levels seen earlier this month.
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
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