GBP/USD outlook: Limited correction may precede bearish continuation

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable is trading within a narrow range in early Wednesday after hitting new 2021 low (1.3342) on Tuesday but failing to sustain break below previous low of Nov 12 (1.3353).

Overall structure remains bearish but long tail of Tuesday’s candle, accompanied with fading negative momentum and oversold stochastic on daily chart, suggest that bears may take a breather before larger downtrend resumes.

Initial resistance lays at 1.3420 (converged 5/10DMA, attempting to form a bear-cross) with extended upticks expected to remain below 1.3500 zone (Nov 18 lower top / falling 20DMA) to keep bears in play for extension towards 1.3288 (100WMA) and more significant support at 1.3164 (Fibo 38.2% of 1.1409/1.4249/200WMA).

Caution on firm break of 1.3500 zone that would confirm a double bottom and generate reversal signal.

Traders focus on release of US data (weekly jobless claims; Q3 GDP estimation; durable goods orders and FOMC minutes) which would provide some signals, but also consider a lower volume on Thursday as the US will be shut for a Thanksgiving Day.

Res: 1.3400; 1.3420; 1.3454; 1.3513.
Sup: 1.3342; 1.3288; 1.3200; 1.3164.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.348
2. R2 1.3445
3. R1 1.3412
PP 1.3378
1. S1 1.3346
2. S2 1.3311
3. S3 1.3279

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

GBP/USD slides below 1.3250 after failing to break through 23.6% Fibo

The GBP/USD pair meets with a fresh supply during the Asian session on Wednesday and moves away from a nearly two-week high around the 1.3275 region, touched the previous day. Spot prices currently trade around the 1.3235 zone, down 0.20% for the day, as traders look to speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Kevin Warsh for a fresh impetus.

EUR/USD keeps losses near 1.1400 after soft Eurozone inflation data

EUR/USD keeps the offered tone intact near 1.1400 in European trading on Wednesday, pressured by softer Euronze and German inflation readings and receding bets for aggressive tightening by the European Central Bank (ECB). Traders will take more cues from the US Manufacturing PMI due later in the day.

Gold stays in red below $4,000, awaits Warsh's speech

Gold remains under selling pressure below $4,000, in the red for the third straight day on Wednesday. The Iran uncertainty and Fed hike bets support the USD, weighing on the commodity. Traders now look to Fed Chair Warsh's speech and the US data for a fresh impetus.

ISM Manufacturing PMI expected to signal continued expansion in the US

Attention shifts to Wednesday’s release of the June ISM Manufacturing Purchasing Managers Index, one of the most closely followed indicators of activity in the US manufacturing sector and an important barometer of the broader economy. Markets expect the headline index to remain unchanged at 54.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The European Central Bank Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Federal Reserve, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.