FX.co ★ GBP/USD: Daily analysis for August 22, 2013

Daily chart: The GBPUSD pair found strong resistance at the 1.5642 level. It is very likely that this pair falls to support at the 1.5506 level, but we must be careful, because this fall could be the formation of a lower high pattern, to continue strengthening the current trend bullish. However, if this pair manages to break the resistance level of 1.5642, it is expected to rise to the level of 1.5746. The MACD indicator is in extreme overbought, which could indicate that the current moves are corrective, but we must be watchful.

H4 chart: GBPUSD is breaking the support at the 1.5604 level. If successful, it is expected to fall to support at the 1.5512 level. However, this does not mean that the bullish trend is to invalidate this fall, but if the pair manages to break the support at the 1.5512 level is expected to fall to deepen the level of 1.5436, very close to the 200 SMA. On the other hand, if the pair manages to consolidate above the level of 1.5604, it is expected to rise to the level of 1.5698. The MACD indicator remains in negative territory, which could support the current bearish trend in this pair.

H1 chart: The pair broke the support at the 1.5632 level and now, this is trying to break the support at the 1.5590 level. If successful, it is expected to fall to the level of 1.5534, which could endanger the bullish trend that was driving in the last days. However, it is very likely in today's session, the pair form a higher low pattern. On the other hand, if GBPUSD manages to break the resistance at the 1.5632 level, would be expected to rise again to the level of 1.5686. The MACD indicator is in negative territory and showing extreme oversold levels, so we must be cautious.

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the GBP/USD pair breaks a bearish candlestick; the support level is at 1.5590, take profit is at 1.5534, and stop loss is at 1.5647.