GBPUSD Regains Demand on Key Support Level – Sept 17, 2014

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GBPUSD Regains Demand on Key Support Level - Sept 17, 2014

GBPUSD Regains Demand on Key Support Level - Sept 17, 2014GBPUSD is taking a break from its recent selloff as the pair found support at a long-term area of interest. The daily chart shows price stalling at the 38.2% Fibonacci retracement level, which lines up with a former resistance zone.

Stochastic is also confirming this potential pickup in buying pressure, as the oscillator is starting to move out of the oversold zone. MACD is also reflecting oversold conditions, with the potential return of buyers likely to trigger a strong bounce.

In this case, GBPUSD could make its way back up to the previous highs near the 1.7200 major psychological level eventually. Of course this mostly depends on the outcome of UK events this week, such as the release of the BOE minutes and the Scottish referendum, which might dictate GBPUSD long-term price action.

GBPUSD Forex Levels

A weak rally might last until the near-term area of interest at the 1.6500 major psychological level, as the upcoming FOMC statement might also renew demand for the US dollar. A break below the pair’s current levels could lead to a test of the 1.6000 major psychological support zone.

The BOE minutes could show another 2-7 vote in favor of rate hikes, which could give GBPUSD more buying momentum. Another factor that could boost support for this pair is the UK jobs release, which is slated to show a 29.7K drop in unemployment. If both events turn out positive for the pound, GBPUSD could break past the 1.6300 major psychological resistance and go for more gains.

However, traders might be less inclined to pile up long GBPUSD positions ahead of the Scottish referendum, in case a secession by Scotland leads to more political and economic uncertainty for the country. This might undermine any pound rallies as it would put the country’s economic progress in jeopardy and force the BOE to keep interest rates on hold much longer.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.