FX.co ★ GBP/USD Intraday Technical Analysis

The spot rate evolves between the range of 1.5660-1.5720 since august 10th. This morning it broke the intermediate support of its medium term bullish channel at 1.5660 leading to acceleration. It is testing now the lower limit of its channel at 1.5630 suggesting a rebound. However, a break of these levels would free a large potential and initiate a bearish channel.

Technical indicators provide sell signals supporting the assumption of a decline in a short term. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. Moreover, the inferior band has been broken suggesting the initiation of a new trend.
The spot rate tests the lower limit of its channel for this reason we recommend 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy on the level of 1.5630 with the 1st objective at 1.5690 and then at 1.5720. A breakthrough 1.5600 will invalidate this scenario. The second scenario is the hypothesis of a break of its support, and here then we recommend a “sell stop”. We suggest to sell the spot rate as soon as it is broken through its support of 1.5630 with the 1st objective at 1.5570 and then at 1.5550. A breakthrough 1.5650 will invalidate this scenario.