USD/GBP could not take advantage of a strong afternoon rise and was rejected at the 1.3800 level. A 30-35 pip decline in the GBP/USD pair, which had been trading near two-week highs, left the pair trading with just moderate intraday advances around the 1.3765-70 range. While the US dollar was still under pressure, the GBP/USD pair was able to gain some ground on Tuesday.
Bullish traders will wait until the 200-day SMA and 50 percent Fibo confluence hurdles have been overcome. It’s worth noting, though, that a sudden surge of new COVID-19 cases in Great Britain has dampened sterling’s recent advances. This is because of a crossover barrier at 1.3880, which has been an obstacle for the bulls for quite some time. A critical milestone should now be reached for short-term traders at the 200-day SMA and the 50 percent Fibonacci level of the 1.3984-1.3602 decline.
Caution for Aggressive Traders
For ambitious traders, conflicting trend lines on hourly/daily charts are a warning sign. Momentum is building in the hourly charts but the daily chart has yet to show a bullish tilt. That’s why waiting for a persistent rise beyond the stated barrier before putting further bullish wagers is recommended at this point. There’s a good chance that the immediate decline is protected by the 38.2 percent Fibo level, which is at 1.3745. If the GBP/USD unit breaks under the 1.3700 level, or the 23.6 percent Fibo support, there might be some fundamental trading.
However, the 1.3800 level may continue to function as a powerful barrier, which, if crossed effectively, would pave the way for more advances. Before attempting to regain the 1.3900 level, the GBP/USD pair may advance to the 61.8 percent Fibo level, around the 1.3840 zones.
GBP/USD price CHART. Source: Tradingview.com
A break-over resistance at 1.3780 has allowed GBP/USD to test the next barrier at 1.3800. The next hurdle for GBP/USD is positioned at the 50 EMA at 1.3815 if the test is successful. It will be possible to test the 1.3835 barrier if the price moves over the 1.3815 resistance level.
GBP/USD will go towards the next support level at 1.3875 if it can stabilize beyond this mark. Prior resistance at 1.3780 will be the first bearish signal for the dollar. The 20 EMA at 1.3765 may be tested if 1.3780 is broken. If GBP/USD falls under the 20 EMA, it will challenge the next barrier at 1.3745, which is the next resistance level. Assuming GBP/USD passes the support at 1.3745, the pair will be pushed towards 1.3710.