GBP/USD is trading just below the 200 EMA and below the 21 SMA with a positive bias, both moving averages have become strong resistance.
Besides, near this level it crosses the bearish channel line that offers additional resistance.
Since January 13, the British pound has fallen more than 300 pips reaching a low of 1.3436. Around this area of 1.3436, a double bottom pattern was formed, giving it a strong technical bounce that enabled the pair to reach the 200 EMA at 1.3514.
The outlook remains bearish as long as the pound trades below 1.3528 (21 SMA).
Conversely, a daily close above 1.3550 could give the British pound a positive bias and GBP/USD could return to price levels of 1.3671 and even 1.3750.
On the downside, 6/8 Murray is located at 1.3427. The bearish move could be accelerated and the price could fall to 5/8 Murray located at 1.3305.
However, the eagle indicator has touched the 5-point level which represents an extremely oversold market. A technical correction is likely in the next few days towards the support of 6/8 Murray. Thus, the currency pair could gain momentum to bounce back and break the 200 EMA.
The ongoing conflict between Russia and Ukraine, signs of a slowdown in global economic activity and political jitters in the UK are forcing investors to stay away from the British pound and take refuge in the dollar.
Our trading plan for the next few hours is to sell below 1.3514 with targets at 1.3427 and up to 1.3305. Conversely, a daily close above 1.3530 could be a positive sign and we could buy with targets at 1.3671.
Support and Resistance Levels for January 26 - 27, 2022
Resistance (3) 1.3610
Resistance (2) 1.3564
Resistance (1) 1.3528
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Support (1) 1.3451
Support (2) 1.3427
Support (3) 1.3399
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Scenario
Timeframe H4
Recommendation: sell below
Entry Point 1.3514
Take Profit 1.3427 (6/8) 1.3305 (5/8)
Stop Loss 1.3552
Murray Levels 1.3671 (8/8) 1.3549 (7/8) 1.3427 (6/8) 1.3305 (5/8)
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