FX.co ★ Technical analysis and trading recommendations on GBP/USD for May 01, 2015

The cable has been extending its bullish bias for seven days in a row. Ahead of the UK's election next Thursday, the pound is trading higher against the USD. We initially expect the pound will be under pressure, but the soft USD allows the cable to fly high. From the April low's, the cable rose more than 900 pips. At yesterday's session, the cable edged lower and probably made a double top 1.5498. Strong resistance seems at 1.5555 which is the previous swing high on the daily chart and 200Dema. In our previous reports, we repeatedly advised big spikes were available above 1.5000. The cable gave handsome gains of 500 pips. Though the cable closed above 20&50Dsma, a bullish crossover has not taken place yet. The cable managed to recover the March losses in April.

Key support levels:

100DEMA 1.5230,100DSMA, 1.5170, 20WSMA 1.5150, 50DSMA 1.5022, 20DSMA 1.4995.

Resistance levels:

200DSMA1.5553, 200DEMA 1.5693. A double top at 1.5498 rounded to 1.5550.

The above technical levels have been provided ahead of the big event, the general election in the UK next week. We expect wild moves in the coming week. On the daily chart, RSI is found at the extremely overbought level of 73.

Intraday view: The cable shifted from lower lows to lower tops on the hourly chart after April 20. A double top was formed at 1.5500 roughly. The trading pattern is framed between 1.5500 and 1.5300. On the higher side, bulls have only 50pips available in intraday. For risky traders, we recommend buying above 1.5365 with targets at 1.5385, 1.5400, 1.5430, 1.5500, and 1.5550. Safe traders can buy above 1.5400 with the targets at 1.5430, 1.5500, and 1.5550. Bulls can challenge 1.5550 in case the double top is breached. On the bearish front, we recommend selling below 1.5300 with the targets at 1.5260, 1.5230 100Dema, 1.5200, 1.5170 100Dsma, and 61.8 FE. On the four hour chart, the price closed and is trading below 35DEMA, not a good sign for bulls.

Trade: Buying above 1.5365, selling below 1.5300.