Intraday Market Analysis: GBPUSD Hits the Crossroads

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GBPUSD Technical Analysis

In today’s intraday strategy we are focusing GBPUSD 4hr chart. We have noted the currency pair has painted lower highs and lower lows, which is one of the distinct signs of a forthcoming uptren.

GBPUSD 4hr Chart

Please click on the chart to enlarge:

GBPUSD 4hr Chart 13/08/15

GBPUSD 4hr Chart 13/08/15

GBPUSD Strategy

 GBPUSD has reached a key support level, supported by the 21 Moving Average (MA, in black). The dip marks the second lower high since the price recovery over 10 August lows. If the support level is successfully tested by the market and affirms the third higher high, commonly known as the third wave, the anticipated gains following the breakout are likely to target 1.5780.

Although this is an intraday strategy, this is also inline with our assumption that the Fed will not hike rates in September as currently anticipated by the market, which will contribute to a weak US Dollar (USD). The 4hr chart will close at 17:00 GMT. A re-test of the support is possible as we near illiquid hours before the bullish correction may materialize. Deep-buying strategies may be exercised upon a re-test of the support or a break above 1.5665 that may unleash moderate buying in GBPUSD.

Looking at the longer term projection there is a fair possibility GBPUSD is on its path for a strong recovery towards 1.6300. This will only take place when the Bank of England (BOE) hikes rates, which will kick-start the medium-term uptrend across multiple GBP pairs and crosses. As we wrote earlier, we are currently not expecting the Fed to hike rates in September following the PBOC Yuan devolution against the US Dollar.

If GBPUSD breaks below the 4hr support the bearish wave may initialy target 1.5550. A break below may pave the way for further selling towards 1.5455. At the time of this writing we are expecting the support level to hold and contain any further weakness in GBPUSD.

16/08/15 UPDATE: GBPUSD traded inline with our bullish projection, just short of our predetermined target.

GBPUSD 4hr Chart

Please click on the chart to enlarge:

GBPUSD 4hr chart 14/08/15

GBPUSD 4hr chart 14/08/15

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Intraday Market Analysis: GBPUSD Hits the Crossroads
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Intraday Market Analysis: GBPUSD Hits the Crossroads

Last Updated on August 19, 2015