GBP/USD has pulled back from the 1.30 level and the October 20 4-hour chart shows a major battle looming between the bears and the bulls. Support has formed at 1.2920 while resistance moves to 1.2975 as reported by analysts and experts.
“Pound/dollar is trading above the 100 and 200 Simple Moving Averages but below the 50 SMA, and momentum has flipped back down. All in all, the picture is mixed amid the tight range trading.”
The support at 1.2920 is the daily low which is also underpinned by stronger support located at 1.2865, a double bottom. Analysts say that the next level to watch is 1.28.
The resistance that has formed at 1.2975 was the swing high twice in early October. That is then followed by October 19’s high of 1.3025, and then by 1.3080, the monthly peak.
The GBP/USD pair is currently trading around 1.2950 which is off the highs as Brexit talks are yet to resume officially after mixed reports. The US fiscal stimulus talks are put into context as British PM Boris Johnson is expected to put the Greater Manchester area under lockdown.
The strong positive momentum overnight was stopped near the resistance marked by a 1-week-old descending trend line. The downside is cushioned near the 200-period SMA on the 4-hourly chart. If the support around the 1.2935 regions is breached, the pair might plunge towards testing the sub-1.2900 level.
But, strong horizontal support has formed near the 1.2865-60 region, which, if broken, will open the way for a more near-term depreciating move. On the other hand, the 1.3000 mark is the nearest resistance followed by a trend-line resistance that has formed near the 1.3025-30 region.
A strong break above these levels will negate near-term bearish bias and lift the GBP/USD towards the monthly swing highs near the 1.3080-85 region. A sustained move above the 1.3100 level will act as a fresh trigger for the bullish traders and set the mood for a move above the 1.3200 level.