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.
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