On Friday, December the 10th, after the US inflation data, the British pound broke the downtrend channel that was formed since October 25. The pound is expected to consolidate above the 21 SMA located at 1.3230 and may gain momentum to reach the 5/8 Murray around 1.3305 and up to the 200 EMA located at 1.3401.
The Fed is expected to announce its monetary policy decision on Wednesday. Investors expect a more aggressive policy to be adopted to contain inflation that is increasing every day.
The outcome will porvide traders a clue to determine the next trajectory for GBP / USD in the medium term. In view of the fact that the pound is oversold, a technical correction is expected until the end of the month.
Conversely, if the pound trades below the 21 SMA around 1.3230, a further downward movement is expected towards the support of 4/8 at 1.3183. This movement could confirm the resumption of the downward force. GBP/USD could reach the psychological level of 1.3000 in the medium term.
Our forecast for the next few hours for the British pound is a consolidation above 1.3230 (21 SMA). As long as GBP/USD trades above this zone, we will have an opportunity to buy with the target at 1.3305 (5/8) and 1.3401 (200 EMA). If 5/8 is broken, we could buy with targets at 1.3427 (6/8).
The market sentiment report for today, December 10, shows that there are 72.44% of operators who are buying the GBP/USD pair. This data provided a bearish sign in the medium term. Since the pair is heavily oversold, a correctional movement to the resistance zone 200 EMA at 1.3401 is expected first. After breaking the downtrend channel, the eagle indicator is showing a bullish bias.
Support and Resistance Levels for December 13 - 14, 2021
Resistance (3) 1.3384
Resistance (2) 1.3330
Resistance (1) 1.3296
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Support (1) 1.3230
Support (2) 1.3207
Support (3) 1.3185
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A trading tip for GBP/USD on December 13 - 14, 2021
Buy above 1.3230 (21 SMA) with take profit at 1.3305 (5/8) and 1.3401 (200 EMA), stop loss below 1.3190.