Wed. Oct 27th, 2021

A crucial moment

The pound has reached an interesting level against the dollar, which could determine whether the pair is back in bullish territory or at the end of a correction.

The pair found strong support around the SMA band of 200/233 days a couple of weeks ago and has since bounced back strongly. This came after passing below the 55/89-day SMA band in mid-June, which had been a reliable level of support for the past year.

The pair is now running in the 55/89 band from below, which will be an interesting test of the strength of the break. A bounce of this level would act as confirmation of the break.

With the 55/89 band also falling around 50 and 61.8 fiber levels (June high to July low), it’s really a great level for the couple. It can be seen that a setback above the height exceeds the initial break, while a failure can be a very bearish signal.

The key level below becomes 1.38, which matches the past support of the daily chart, but also some key levels of the 4-hour chart.

The pair has only recently broken above the 55/89 and 200/233 SMA bands on the 4-hour chart, which could give it a boost to run at 1.40 and break significant resistance.

A move below 1.38 returns to the pair below the two moving average bands on the 4-hour chart, which could act as bearish confirmation.

This article is for informational purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its subsidiaries, subsidiaries, directors or administrators. Leverage trading is high risk and not suitable for everyone. You could lose all your funds.

Craig Erlam

London-based Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as an analyst and financial market operator, he focuses on fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and International Business Times, and he also appears as a regular commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig is a member of the Society of Technical Analysts and is recognized as a certified financial technician by the International Federation of Technical Analysts.

Craig Erlam

Craig Erlam

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