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Trading signal for GBP/USD on November 01 – 02, 2021: buy above 1.3660 (4/8)

Relevance up to 10:00 2021-11-03 UTC–4

Rebounding off the low of 1.3641, GBP/USD is recovering part of the losses of the European session and is now located above 4/8 murray. The pair is likely to continue the technical rebound and the price could reach the area of the 200 EMA and up to the SMA 21 around 1.3740. At this level, 23.6% of the Fibonacci retracement is located that could be a strong barrier for GBP / USD.

Last Friday, the British pound sharply broke the 200 EMA. This is a negative sign. The odds are that the rebound we are seeing in these hours is only a correction or a pullback towards the 1.3740 resistance. So, the currency pair could again resume the downtrend. Therefore, a good point to sell would be the SMA of 21 or 23.6% Fibonacci with targets at 1.3671 (4/8) and up to the 61.8 Fibonacci at 1.3570.

The dollar index (#USDX) last week sharply rose to the 94.27 area, surpassing the 200 EMA that suggests bullish prospects. At the beginning of this week, it left a GAP and is making a correction which could favor the British pound. However, investors are still cautious regarding the Fed’s monetary policy, in particular the decision to tame the soaring inflation. Such speculations may continue and the rise of the British pound is likely to be short-lived.

In the short term, the GBP / USD pair is expected to trade lower because it is located below the SMA of 21 and the EMA of 200. There is strong downward pressure below this zone. Therefore, any pullback towards this level will be considered a good opportunity to continue selling. It is likely that the GBP bearish movement will push it down to the zone of the 61.8 Fibonacci retracement around 1.3570.

The technical reading of the eagle indicator shows that since October 20 after having consolidated around 95, GBP/USD made a negative movement guided by a bearish channel. A correction may follow in the next few hours due to the fact that indicator is generating a positive signal at the moment which could benefit GBP. If it fails to break this channel, it will only mean a correction and we could consider selling the pair in the next few days.

The market sentiment report for today shows that there are 55.48% of traders who are selling the British pound. This is a neutral sign. If this figure decreases and falls below 40%, it could be a negative sign for the GBP / USD pair and a drop to the psychological level of 1.35 could occur.

Support and Resistance Levels for November 01 – 02, 2021

Resistance (3) 1.3785

Resistance (2) 1.3726

Resistance (1) 1.3705

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Support (1) 1.3658

Support (2) 1.3623

Support (3) 1.3564

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A trading tip for GBP/USD for November 01 – 02, 2021

Sell if pullback 1.3740 (23,6%) with take profit at 1.3671 (4/8) and 1.3570 (61,8%), stop loss above 1.3780.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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