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GBP/USD Following Massive Uptrend, Brexit Deadline Looms

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Technical analysis of Forex market

Key Highlights

  • In the past few days, GBP/USD rallied above the 1.2750 and 1.2950 resistance levels.
  • A crucial ascending channel is forming with support at 1.2940 on the 4-hours chart.
  • The People´s Bank of China kept the interest rate at 4.2%.
  • The US Existing Home Sales could decline 0.7% in Sep 2019 (MoM), whereas the last was +1.3%.

GBP/USD Technical Analysis

This past week, the British Pound surged more than 400 pips above the 1.2750 resistance area against the US Dollar. GBP/USD even broke the 1.2950 resistance zone to move into a strong uptrend.

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Looking at the 4-hours chart, the pair followed a solid bullish path after it settled above the key 1.2500 resistance area and the 100 simple moving average (red, 4-hours). The recent rise was such that the pair even climbed above the 1.3000 resistance.

A high was formed near 1.3012 and the pair is currently consolidating gains. If there is a downside correction, the pair might find support near 1.2940 or 1.2920.

Moreover, there is a crucial ascending channel forming with support at 1.2940 on the same chart. If there is a downside break below the channel support, the pair could test the 50% Fib retracement level of the recent wave from the 1.2748 low to 1.3012 high.

If there are additional losses, the pair could correct lower towards the 1.2880 pivot level. On the upside, there are many hurdles for buyers near the 1.3040 and 1.3060 levels. If the pair continues to rally, the next major stop may perhaps be near the 1.3200 resistance.

It seems like the Brexit deadline of Oct 31, 2019 is impacting the market sentiment. Therefore, the next few days could place a major role and GBP/USD might witness strong swing moves.

Looking at EUR/USD, the pair gained bullish momentum above 1.1100 and 1.1120. In the short term, there could be a downside correction, but the pair is likely to continue higher towards 1.1200 and 1.1220.

Upcoming Economic Releases

  • US Existing Home Sales Sep 2019 (MoM) – Forecast -0.7%, versus +1.3% previous.
  • Canadian Retail Sales Aug 2019 (MoM) – Forecast +0.4%, versus +0.4% previous.
  • Canadian Retail Sales ex Autos Aug 2019 (MoM) – Forecast +0.1%, versus -0.1% previous.